Is "smith manoeuvre" technique obselete?
The technique to turn non-tax deductible mortgage into tax-deductible investment loan.
http://www.theglobeandmail.com/globe-in ... e12059456/
Currently, 5-year variable mortgage rate at banks is 2% (P-0.7%). And HLOC at p+0.50% = 3.20%. The difference between HLOC & a mortgage is 3.20-2=1.20. Therefore, HLOC interest rate is 60% more expensive than a mortgage. The highest tax bracket is 45%. So the tax saving is gone.
The only benefit is to allow some home owners to free up some equity stuck in their home. But bank only allow 65% of their property value for HLOC. Am I missing anything?