Borrowing From Peter to Invest in Paul: Does Borrowing Against Your Home To Invest Make Sense?
To quote an oft-repeated line from Hamlet, “Neither a borrower nor a lender be.” To many of us, like my grandfather, these are words to live by (particularly the bit about not borrowing). Traditional wisdom suggested saving until you could pay in cash and, if you had to borrow to buy something like a home, moving heaven and earth until you owned a clear title. As for me, I don’t see things as nearly that clear- cut. While I agree that saving for the future is a wonderful thing and that living beyond your means is the road to ruin, carrying debt isn’t necessarily as evil as some might suggest. I hope to show you at least a couple of exceptions to the general rule, after which I’ll turn the focus to leveraged investing using home equity. Then you can decide if it’s a good thing for you or merely for those receiving commissions. You’ll also see some suggestions that I hope will help tip the odds more firmly in your favour if this path appeals to you. Finally, although I’ll discuss some borrowing options in passing, I will leave a more detailed review of this subject to Russ Morrison, a mortgage-broker friend of mine who excels at this sort of thing.
$500 plus GST
Colin S. Ritchie 