Helping a Sole-Trader Medical Specialist Explore Debt Recycling

An existing client, a medical specialist operating as a sole trader, initially approached us to help purchase a home in Sydney.

As the client was a medical professional, we were able to access a specialist lending policy that allowed them to borrow up to 95% of the property value, helping them purchase their home without needing the level of deposit that would typically be required.

Within 12 months of purchasing the property, the client returned to discuss their broader financial position.

As a sole trader, the client had limited opportunities to structure their affairs through traditional business tax deductions. They were interested in debt recycling as a potential strategy for converting non-deductible home loan debt into investment debt, subject to appropriate tax and financial advice.

The challenge was finding a lender and loan structure capable of facilitating the strategy effectively.

Debt recycling isn’t offered or structured in the same way by every lender. While several major Australian banks provide facilities that can be used for debt recycling, their loan structures, processes and requirements can vary considerably.

We assessed the available options and identified lending solutions suited to the client’s circumstances and intended strategy.

Importantly, we also encouraged the client to work closely with their accountant and, where appropriate, obtain independent tax advice before implementing the strategy. Debt recycling involves tax and investment considerations, so the structure needs to be established correctly and maintained appropriately.

The client was able to identify a suitable lending structure to facilitate their debt-recycling strategy, giving them greater flexibility in managing their home loan and investment plans.

The case highlights why the choice of lender and loan structure can matter significantly when a medical professional is looking beyond simply obtaining a home loan.