You never get something for nothing, but it does work, I had this on my condo for a while and I do it currently on my house, plus I'm thinking of doing it for another property. No business is required. A good financial planner and tax accountant should be familiar with the strategy enough already, and most banks offer a HELOC now.
Basically you get a Home Equity Line of Credit rather than a traditional mortgage (which precludes high ratio). That allows you pay interest only on the borrowing. I have mine at prime - 0.5.
Then you take the money that you would normally pay towards the principle on your payments and direct that to some sort of investment. Over time that investment grows, you cash it in, pay off a portion of the line of credit, reborrow the money and reinvest it. Now that portion of the interest on the line of credit is tax deductable because it is borrowing for the purposes of investing. Keep doing it until you've got your whole house "paid off", but it isn't really paid off, you have investments worth more than the value of the house.
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I get how it works, I'm just not sure if there's a genuine advantage in having more retirement dollars but still the equivalent of a mortgage in debt.
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Well I wouldn't recommend anyone who hasn't maxed out their RRSPs to do it, I haven't run the numbers in place of RRSPs but I doubt it would be a good idea.
But yeah this makes a few assumptions. To work your investments do have to grow. You have to be VERY disciplined to not give into the temptation to pay interest only "just for this month, or just this few months till we get back on our feet". If you have problems organizing your money this is NOT the strategy for you.
I like it for a number of reasons. First, at today's rates isn't not very hard to find investments that beat prime and you don't even really need to do that to gain the benifits.
Second, if you pay down the mortgage of your house, every dollar you've put towards the principal is dead weight. This way not only do I get the gain of appreciaton of the house, I also get the interest on the money that would normally just sit there as "equity", plus the tax breaks.
Debt = Good It's just the wrong kind of debt that is bad. Good debt is debt that is working for you.
There are other ways to get your mortgage tax deductable as well (like getting it held inside your RRSP) but I haven't explored those options much.