What it is:

You use a re-advanceable mortgage (mortgage + HELOC). As you pay down your mortgage, you reborrow the paid-down principal on the HELOC and invest it. Because the borrowed money is used to earn income, the HELOC interest becomes tax-deductible.

Check if you qualify:

1. Equity: You have ~20%+ equity in your home.
2. Product: Your lender offers a re-advanceable mortgage / HELOC (ideally with sub-accounts).
3. Comfort: You’re okay investing for the long term and keeping tidy records.
4. Income: Stable enough to handle rate moves and market ups/downs.

Set it up:

1. Switch/Set up a re-advanceable mortgage (mortgage + HELOC that increases as you pay principal).
2. Open a dedicated investment account (non-registered).
3. Keep it clean: Ask the bank for separate HELOC sub-accounts used only for investing.

The monthly loop:

1. Make your normal mortgage payment.
2. Watch your HELOC limit grow by the principal you just paid.
3. Immediately transfer that amount from the HELOC directly into your investment account (don’t park it in chequing).
4. Invest in income-producing assets (e.g., diversified ETFs, dividend stocks, rental improvements, etc.).
5. At tax time, your accountant claims the HELOC interest as a deduction.
6. Use your tax refund to make a lump-sum prepayment on the mortgage.
7. Repeat → your mortgage shrinks, HELOC (investment loan) grows, and the interest stays deductible.

Cash-neutral tip: If you want zero extra cash out-of-pocket, each month use the reborrowed amount to pay that month’s HELOC interest first, then invest the remainder.

Three common starting points:

• Own home outright: Open HELOC → invest → deduct HELOC interest.
• Have mortgage + investments: (With advice) sell investments → pay off mortgage → reborrow the same amount → repurchase after 30+ days → deduct interest.
• Have mortgage, no investments: Do the monthly loop above with a re-advanceable HELOC.

Simple example:

• You pay $1,000 mortgage principal this month.
• HELOC limit rises $1,000 → you borrow $1,000 and invest it.
• End of year you’ve invested $12,000 and deduct the HELOC interest.
• Your tax refund goes back against the mortgage, speeding everything up.

Quick risks:

• Market risk: Investments can drop; you still owe the HELOC.
• Rate risk: HELOC is variable; payments can rise.
• Discipline: Borrowed funds must go direct to investments (no mixing).
• Records: Keep clean statements/sub-accounts so CRA can see the flow.

What we’ll handle for you:

• Confirm eligibility and set up the right product.
• Help you structure sub-accounts and a clean money trail.
• Coordinate with your advisor/accountant so the investments and tax filings are done right.
• Give you a simple monthly checklist so it’s low-effort.