Hi Tim - my proposal wasn't to increase your debt, but rather to have a bit less debt with the bank (at a relatively high rate) and a bit more with your broker (at a lower rate). Your debt level remains the same, but your average interest rate is lower.
Broker debt is cheaper than bank debt, but riskier. However, my proposal mitigates the risk virtually entirely by retaining some bank debt unused, and by not milking your broker too hard. At a 4% vs 1.5% rate differential, every $100k shifted pays you just over $200 per month in savings.
On the question of whether to pay down your mortgage quickly or slowly, I am generally in the slowly camp in the present market. Even with quite "boring" share investments, your returns ought to exceed the current interest rates (doubly so if you're taking up my broker interest proposal for a part of your mortgage). That said, the one thing you want to avoid in investment is being forced to sell something at a time other than of your own choosing. So in a scenario where you lose your employment, for example, you'll want to have a liquidity buffer sufficient to ride that out. If you're a game sort, that could be extra headroom on the mortgage, but most people probably prefer a bit of cash.
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Hi Tim - my proposal wasn't to increase your debt, but rather to...
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Price($) | Vol. | No. |
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