Wealth Strategy: Turning debts into an advantage

How one couple turned debts into a wealth-building opportunity

The Challenge

A lovely young couple came to us to get some help building their business. Before we even had a peek at the business performance, we created an overall picture of where their assets and debt were sitting. Let’s say it was not a pretty sight!

They had an interest only home loan, an investment property loan that was principal and interest, and to beat all that, they had lent $60,000 from their personal savings to their company to start the business a few years prior. Worst of all, they had $80,000 cash sitting in the company bank account.

As a result of this setup, the home loan balance was not reducing at all, valuable funds were being used to repay the deductible investment property loan, and there was no tax deduction being claimed for any interest on the business loan.

Our Actions

To make this a much more tax effective system, and one that would result in the non-deductible home loan being paid off far sooner, we did the following:

  • Repaid the $60,000 to the business owner – this went straight off the home loan;
  • Refinanced the home loan to principal & interest so that every payment reduced the balance;
  • Refinanced the investment property loan to interest only, so that every cent paid was tax deductible;
  • Any future business borrowings would come in the form of a business loan or bank overdraft.


With some simple tweaking, these nice young business owners are now in a much stronger position to build their wealth effectively. And what did they have to say about our help? “Why did no one ever talk to us about this before?”

Have a look at your debt structure – and then ask Sullivan Dewing if it is working the best way for you.

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