When it comes to building long-term wealth, the right loan structure can make all the difference. Recently, we worked with a couple from Rydalmere, NSW, whose main goal was simple but powerful:
Restructure their mortgage and personal debts, release equity from their home, and use it to purchase an investment property. creating a foundation for financial freedom through to retirement.
Step 1: Restructuring Their Home Loan and Clearing Debts
The first step was to refinance their owner-occupied home loan to secure a better interest rate and consolidate all personal debts. By rolling everything into one streamlined mortgage, they not only reduced their repayments but also freed up equity for the next stage of their plan.
● Loan Split 1: $710,000 P&I (Owner-Occupied) to refinance the home loan and consolidate all personal debt
● Loan Split 2: $230,000 I/O (Investment) cash-out for the deposit and costs on their new investment property
With a strong loan-to-value ratio (LVR) of just 50%, they were in an excellent position to leverage their equity.
Step 2: Funding the Investment Property
The couple had already executed contracts on a new house and land package in QLD:
● Land: $525,000
● Build: $429,840
● Total Loan Sought: $763,872 (80% LVR)
The $230,000 equity release from Step 1 covered the 20% deposit and costs for the new investment, allowing them to move forward without dipping into other savings.
Step 3: Long-Term Strategy and Retirement Goals
Both clients are in long-term PAYG employment, married with three adult children. Their focus is clear:
● Restructure debt for efficiency
● Invest in quality property for capital growth and future rental income
● Build a portfolio that generates wealth well into retirement
Overcoming a Credit File Hiccup
During the process, an old credit card account appeared on the client’s credit file, showing a small delinquency. The client believed the card had been closed years ago, but fees had continued accruing. This was quickly resolved by contacting the company to arrange immediate closure and obtain a closure letter. Importantly, the issue did not reflect their overall financial conduct, which has been consistently strong.
Key Takeaway:
Smart debt restructuring isn’t just about refinancing. It’s about creating the right structure to support your next financial move. In this case, the couple turned their home equity into an investment opportunity without overextending themselves. With the right plan, their mortgage now works for them, not against them, setting them up for a stronger retirement.