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Author: Keith Uthe Demystifying Mortgages |

Are you behaving like the wealthy – the approximately 10% of Canada’s population that get to share over half of Canada’s wealth? Are you using the equity in your house like the wealthy do? No? Well, don’t worry – you’re not alone… We Canadians have been taught that it’s best to be completely mortgage-free. But by being mortgage-free, we are behaving like the non-wealthy.

When you bought your house, you behaved in that moment like the wealthy because you got a down payment together and borrowed the rest from someone else. You borrowed to buy an appreciating asset and the wealthy said, “Well done folks!” But then you immediately stopped behaving like the wealthy because as you made your mortgage payments, you began increasing the equity in your asset, but you did nothing with it. You let that equity increase month after month earning you less than zero percent due to inflation. And the wealthy dropped their collective chins in disappointment, thinking, “Darn, they were so close to getting on the path to joining us at the top of this wealth pyramid. Lonely up here – fun, but lonely…”

When we Canadians get a mortgage to buy our house, the debt is non-deductible because we do not have a reasonable expectation of generating income from this new asset. So, we need to convert it to tax-deductible debt – just like the wealthy do – in order to improve our cash flow, get rid of the non-deductible debt faster, and take advantage of compound growth now.

And by doing so we are both investing for our future and making use of the equity in our home as fast as we are creating it – just like the wealthy do. Soon the wealthy will say, “Welcome to the top – nice view, eh?”

If you are a Canadian homeowner with a mortgage, you have the opportunity to start behaving like the wealthy and climbing that Wealth Pyramid. As a Smith Manoeuvre Certified Professional, contact me and I can show you how.