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Property tip #12: An interesting shift...

Happy Labour Weekend Friday! Here's something to noodle with...

Please say this out loud: "This. Is. Not. Financial. Advice." At all. In any way. Get proper advice on these things, not from some blog post.

There's been quite a shift in the 'return' on debt reduction lately.

Do your own numbers of course, these numbers are just for illustration of the concept.

Let's say the interest rate on your loan is 7%, either already, or likely to be there soon.

Assuming the interest is non-deductible (if it is part-deductible the numbers might change slightly), that represents the equivalent of a (approximate) 10% pre-tax return (7% net).

Of course it can mean less access to liquidity, but that may be able to be circumvented (big word for the day) by an Offset Account or Line Of Credit. Or not, it depends on your own situation of course.

Yep, there are variables here to consider of course, and just because you can doesn't mean you should (get advice), but it's an interesting shift and worth thinking about at least.

Food for thought anyway.


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