Investment Loans
Fluent in Finance
Good debt, bad debt, negative gearing, debt recycling – these are all frequently used terms in the world of finance. Not so much in the real world so to help demystify things, let’s start with a short explainer.
Good Debt
Good debt is money borrowed that produces an income. The asset can be sold to clear the debt without selling the family home. An example of good debt is a loan to buy an investment property.
Bad Debt
Bad debt is money borrowed that does not produce an income and is reliant upon the sale of the family home to clear the debt. An example of bad debt is a loan for an overseas holiday secured by the family home.
Negative Gearing
A property is negatively geared when the expenses outweigh the income generated by the property.
Debt Recycling
Is the process of turning Bad Debt into Good Debt. Best suited for those with share investments, this is an excellent strategy to quickly turn bad debt into good debt.
Seek professional advice
Your own personal circumstances will determine what strategy is best, but we always recommend seeking advice from qualified tax and investment professionals such as your accountant or financial planner.
Contact Lendfirst
To find out more and arrange a consultation with one of our mortgage experts, contact us.