Your mortgage interest isn’t deductible. This is how people change that.
Every payment you make frees up room on a line of credit attached to the mortgage. Borrow that room back, invest it, and the interest on the borrowed part becomes deductible — while the non-deductible mortgage shrinks. The higher your tax bracket, the more the deduction is worth — so it earns its keep in a high bracket and rarely makes sense in a low one. It is also borrowing to invest, so it can lose money. This tool shows both sides.
Your numbers
The readvanceable line’s rate — usually higher than the mortgage.
The rate on your NEXT dollar of income, not your average. Your accountant or last return has it.
Each year’s tax refund
Putting it on the mortgage and re-borrowing it is the faster version; investing it straight is the simpler one.
After 20 years, versus doing nothing
Ahead by $145,934
Tax refunds collected: $138,645 · deductible interest claimed: $346,614
The number that decides it
3.99% a year
That is what your investments must average, before fees, just to match simply keeping the plain mortgage. Fees come out of your side only, so the real bar is higher than this — and below it, the strategy costs you money rather than making it.
Where you stand after 20 years
Bars run left of centre while the debts still outweigh the portfolio, right of centre once they don’t.
Investments minus everything still owed. Both sides spend the identical amount out of pocket every month, and the house is left out of both because it is the same house either way.
An illustration, not advice. Nothing here is tax advice, investment advice or a commitment to lend — set this up with your accountant, not around them. And read this before you like the number: This is borrowing money to invest. The debt is certain; the return is not. A bad decade means you still owe the line while the portfolio is down, and the line’s rate usually floats — it can rise while you hold it. The strategy also needs a readvanceable mortgage, clean paperwork, and the discipline not to touch the line for anything else. It is not for a file that is already tight.
The rules this runs on — and how the math was verified
Canadian semi-annual compounding on the mortgage; the line accrues monthly and its interest is paid from a fresh draw, which is the classic cash-flow-neutral structure. Each year’s refund is the deductible interest times the marginal rate you entered. The comparison mortgage spends the identical cash out of pocket every month, so neither side is quietly given extra money.
The tax basis, checked at the source. CRA’s Income Tax Folio S3-F6-C1 says at ¶1.82 that interest on a second loan used to pay the interest on a first loan is deductible under paragraph 20(1)(c), provided the first loan’s interest is itself deductible — that is the structure modelled here. At ¶1.81 it says compound interest, meaning interest merely added to a balance rather than paid, is deductible only under paragraph 20(1)(d) and only in the year it is actually paid. The difference is execution, not theory, which is why this is set up with your accountant rather than around them, and why the borrowed money must be traceable to the investments.
The credit limits are regulatory. OSFI’s clarification under Guideline B-20 holds the revolving portion of a combined plan at 65% of the home’s value or less, requires anything above that to be amortizing and non-readvanceable, and caps the combined plan’s overall limit at 80% of value. The simulation enforces all three, so it stops re-borrowing exactly where a real lender would.
Growth is modelled without tax drag on the portfolio and without fees, both of which flatter the strategy; the break-even return above is stated before fees for the same reason. The engine passes 44 automated checks — a hand-computed case where the advantage must be exactly zero, the OSFI caps holding under pressure, an independently written second simulation agreeing to the cent, and the directional properties any correct model must show. Arithmetic and citations last verified August 6, 2026. It is an illustration, not tax advice, not investment advice, and not a commitment to lend.
One of the Mortgage Guru family’s 60+ free calculators — counted honestly. Prefer the simple version? Put the same money straight against the mortgage.