Debt Recycling 101: What It Actually Is and Whether It’s Right for You

Feb 10, 2026

They break down what debt recycling actually involves and the step-by-step mechanics behind swapping home debt for investment debt. They outline who it might suit financially and the personality traits needed to stick with it. They cover the big risks, how interest-rate swings can derail plans, and practical setup tips like conservative stress testing and starting small.

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INSIGHT

What Debt Recycling Actually Is

Debt recycling replaces non-deductible home loan debt with tax-deductible investment debt to build wealth over time.
Victoria Devine warns it’s more complicated and not a shortcut despite sounding attractive on social media.

ADVICE

Use Equity To Invest, Not As Free Cash

Pay down your home loan to create equity, then borrow against that equity to invest instead of buying another property deposit.
Use the borrowed funds to invest in income-producing assets and recycle returns to repay the home loan faster.

INSIGHT

Returns Must Beat After-Tax Borrowing Cost

The strategy relies on investments outperforming your after-tax borrowing cost over the long term.
Victoria Devine uses conservative return estimates (around 6%) when modelling viability.

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If you believe the finance bros on TikTok, debt recycling is the magic wealth building hack everyone with a home should already be using. But is it really that simple? So, in this episode, we’re looking beyond the hype to explain what debt recycling actually is, how it works in the real world, when it can work well and why it’s not a shortcut or a strategy that suits everyone.

In this ep:
💰Why debt recycling looks like a no brainer on TikTok
💰What it actually means for your mortgage (and your cash flow)
💰The risks of the strategy finance bros don’t talk about
💰How to tell if it’s smart move for you, or a stress bomb waiting to go off
💰The foundations you need before even thinking about it
💰When debt recycling can build wealth and when it can backfire

**Note: This episode was recorded last year in preparation for Victoria’s maternity leave, so it was recorded before last week’s cash rate rise. If you’re wondering what that change might mean for your mortgage, we’ve got a free mortgage tracker you can use here.

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Acknowledgement of Country By Nartarsha Bamblett aka Queen Acknowledgements

The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708, AFSL - 45128

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