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I wish to leverage my HELOC to invest in dividend-paying investments. How would you advise I approach this? Is this an effective tax savings tool? Is there any financial institution or products you would advise?
—Martha
Borrowing from a home equity line of credit
You know, Martha, in some circles, leveraging—or borrowing to invest—is a taboo subject. I find that funny because there is much less controversy when people borrow to:
Buy a car, which depreciates in value;
buy a house, which normally appreciates, but it can decline;
or take a vacation as a lifestyle investment.
So, why is there controversy around borrowing to invest? It is probably due to a lack of understanding, coupled with the fact that when leveraging goes bad, it’s not good.
Let’s talk about leverage. If you borrow $100,000 at 8%, what rate of return would you have to earn on your investments to break even? Would you guess 8%?
Most people would agree with that answer; it sounds logical, right? I mean, if you borrow $100,000 at 8% and paid $8,000 in interest costs then that would mean you would have to make $8,000 on your $100,000 investment to break even, which is 8%…
The best GIC rates in Canada for 2024
– moneysense.ca
Investing
The best GIC rates in Canada
Find the best GIC rates in Canada. Plus, everything you need to know about how they work.
Compare highest rates
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Mortgage renewal calculator
– moneysense.ca
Is an upcoming mortgage renewal stressing you out? A recent survey by real estate brokerage Zolo found that just 3% of home owners “never worry” about being able to afford their mortgage when it comes time to renew. The rest aren’t so fortunate, with 79% of Canadians worrying about this sometimes, often or all the time.
It may hearten you to know that you likely have options. When it’s time to renew your mortgage, you can either stay with your current lender or shop around for a new one that offers a lower interest rate or different terms. Using a mortgage renewal calculator can help you compare mortgage offers and pick the best one available at the time of renewal.
You’re 2 minutes away from getting the best mortgage rates in CanadaAnswer a few quick questions to get a personalized rate quote*I’m buying a homeI’m renewing/refinancingYou will be leaving MoneySense. Just close the tab to return.
Using a renewal calculator is one of the easiest ways to determine if your current mortgage is working for you or if it’s time to find one that better suits your needs…
