Advice for Home Equity ?

[hkRicer]

So I have around 300k in home equity. I pretty much tried everything i could to pay off the home asap when i started the mortgage. Should I invest this money or what should i do with it to make more money. Anyone know. So i can go to the bank and ask for the equity and i can take some of it out do whatever i want with it right? what are the interest rate like and i heard is tax deductible? i'd like to take out 100k by the way and do some business or investment.

[Chuck Norris]

Too many factors.

How much of a mortgage do you have now?

You're likely going to do one of two things. You can get a second mortgage or just convert your current mortgage to a HELOC. Essentially this turns the value you have in your home into a secured line of credit that you can have access to at any time.

You can then use the money from your HELOC to invest in whatever you want.

If you decide to invest into the stock market, there are endless ways it can be done.
There are people who use the HELOC to buy a 3 for 1 loan for mutual funds and deduct the interest on both the HELOC itself and the investment loan.

If you think the stock market is going to be higher than it is right now, this could be a good option. There are so many ways to structure this I won't get involved in a discussion. You will need to sit down with a good financial planner (this means do not talk to the morons that work at any bank).

You may also consider talking to an accountant that specializes in this stuff since there are changing rules with CRA regarding how these investment tools are taxed later on.

For example, there is an argument that is still tied up in courts regarding using the value of your home for a tax write off for an investment. When you sell your home, you are exempt from paying tax (the principle residence rule) however the rules may change where you will have to repay whatever tax you did not pay because of using your principle residence.

Something to think about because rules do change and you wouldn't want to get yourself into trouble.

You can also use the money to buy what you wish. If you wanted to buy a business, that would be okay. Lots of people have done this because it is the easiest way to have access to capital.

Most people in life will have the bulk of their net worth in their home due to capital appreciation so it's a good step if you have a solid plan. The fact you're asking this on revscene means you're likely very new to this and as I mentioned, you will want to sit down face to face with the right people.

[taylor192]

Originally Posted by qiqin

So I have around 300k in home equity. I pretty much tried everything i could to pay off the home asap when i started the mortgage.

You missed out on a LOT of gains over the past 5 years doing this. You must have had your reasons, when stocks/funds were posting double-digit gains you were paying down a low rate mortgage. What was your reason? Are you risk adverse?

If you are, I'd advise against leveraging your house. Enjoy your paid down property and risk adverse lifestyle. That's not sarcasm, that's truth. Its a nice feeling to have little debt, that's worth more than money sometimes.

Originally Posted by qiqin

Should I invest this money or what should i do with it to make more money. Anyone know. So i can go to the bank and ask for the equity and i can take some of it out do whatever i want with it right? what are the interest rate like and i heard is tax deductible? i'd like to take out 100k by the way and do some business or investment.

Go see an adviser.

I personally would sell the property, take the $300K and rent, wait for housing prices here to drop after the Olympics and BoC raises rates, then buy back in. That will make you more $$$ than any investment.