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Pay off your home faster by buying an investment property

An extra mortgage sounds like the opposite of paying your home off. Used properly, rental income, negative gearing refunds, and debt recycling can wipe years off your PPOR loan. Compare the two paths side by side.

Your Home (PPOR)

$
%
yrs
$
Applied to both scenarios so the comparison stays fair.

Investment Property Strategy

$
%
IP loan assumed interest-only for simplicity.
%
Weekly rent: $625
% p.a.
% of rent
Covers management, rates, insurance, maintenance, vacancy.

Side By Side

Scenario A · PPOR only
25.0 yrs
to pay off PPOR
$0
total interest paid
$0
net position at 30 yrs
Scenario B · PPOR + investment property
0 yrs
to pay off PPOR
$0
total PPOR interest
$0
net wealth at 30 yrs
The difference
Adjust the numbers to see how the investment strategy compares.
PPOR debt over time
PPOR only PPOR + IP
How the IP strategy accelerates payoff
  • Rental income covers most of the IP holding cost.
  • When the IP runs at a loss, negative gearing returns cash at your marginal tax rate.
  • Surplus cash is redirected straight onto the PPOR principal each year.
  • Once the PPOR is clear, the freed-up repayment pivots to smash the IP debt.
  • Meanwhile the IP compounds in value in the background.

This is the exact strategy we model for clients. If you want a second opinion on whether it stacks up for your income and goals, we can help.

Book a free strategy call
← All Tools Negative Gearing Calculator Cash Flow Calculator

Indicative only. Assumes constant interest rates, rental income matching today's figure, and capital growth compounded annually. IP loan is modelled as interest-only. PPOR amortisation is calculated monthly, with investment-driven surplus applied annually. Actual outcomes depend on lender policy, tax circumstances, vacancy, depreciation, and market conditions. Speak to a qualified mortgage broker and accountant before acting.

Paying Off Your Home Faster With an Investment Property

The strategy looks counterintuitive: take on more debt to clear your home loan faster. The maths only works because of how tax deductions, equity growth, and offset accounts interact. Done right, an investment property can shave 5 to 12 years off a 30-year home loan. Done wrong, it drags both properties down.

This calculator compares two paths over 30 years: paying down your owner-occupier mortgage as fast as possible, versus splitting capacity between PPOR and an investment property. The output is total wealth and remaining mortgage at each year mark.

How the Strategy Works

Your home loan interest is not tax deductible. An investment loan's interest is. So $1,000 of investment loan interest costs you $530 to $700 net of tax (depending on your bracket), while $1,000 of home loan interest costs the full $1,000. By using available borrowing capacity for an investment property, the tax system pays a chunk of the carrying cost, the tenant pays another chunk via rent, and you direct cash flow back to the home loan principal. The investment grows in equity over the same period, multiplying total wealth.

When the Strategy Works

It works when three conditions hold. One, your borrowing capacity is sufficient for both loans. Two, the investment market grows at a reasonable rate (4 to 6 percent annual or better). Three, you have the cash flow tolerance for the periods when the investment is negatively geared. If any one of those three breaks, the strategy stalls. Investors who try this without modelling their cash flow position year by year sometimes find themselves selling the investment under duress.

When the Strategy Doesn't Work

If you're already at the top of your borrowing capacity, the strategy can't begin. If your home loan is already small relative to your income, the maths becomes marginal. If your investment market doesn't grow, you've taken on debt for nothing. If you're risk-averse to the point that two mortgages keep you up at night, the psychological cost outweighs the financial benefit.

Why You Don't Just Pay Off Your Home Faster

Counterintuitively, the fastest way to pay off your home is rarely to throw all spare income at the home loan. Compounding works against you on a single asset. Two properties growing in parallel, one paying tax-deductible interest, can produce more wealth and a faster home payoff than one property alone. The growth projection calculator models this side by side.

Pair this with the cash flow calculator for the year-by-year tolerance check, the negative gearing calculator for tax detail, and the yield calculator for the property side. Speak with a property investment advisor if you want to walk through your specific numbers.