Pay off the mortgage (2.45%) and HELOC (3.95%), or use non-registered margin (2.28%)?
Please see below for a summary of our income and net worth for context:
My wife (31) and I (33) are in Ontario and just bought a condo for $616K. No kids. We've paid the downpayment and have a $484K balance owing. We could take out a mortgage, but we could use a combination of non-registered, cash and TFSA to paid it off in full completely.
We were then thinking of doing a "semi-Smith Manoeuvre" to re-fund the non-registered accounts using a HELOC (at 3.95% from RateHub) or use margin on the non-registered account (Interactive Brokers at 2.285%).
- Is there any reason why we should consider a mortgage at all (Ratehub 5-year variable at 2.45%)? If we have the funds to pay the condo off in full, isn't that the best option? (Assume non-registered account has no/minimal capital gains to report. I moved back from the US this year, so ACB is close to market value, and also why I don't have a TFSA at the moment).
- I already have my non-registered account with Interactive Brokers, and their margin rate is 2.285% for $400K (https://www.interactivebrokers.com/en/index.php?f=1595). Is there any reason why should I go with a HELOC at 3.95% when my non-registered cost of borrowing is lower?
- Couldn't I just take out funds from my non-registered account and use that to pay the condo, since any interest payable in the non-registered account becomes tax deductible?