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Analysis Of Re-Advanceable Mortgages, Almas Naseem
Analysis Of Re-Advanceable Mortgages, Almas Naseem
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According to Canadian tax law the interest payments on loans used for investment purposes are tax deductible while interest on personal mortgage loans is not. One way of transforming from non-tax deductible to tax deductible interest expenses is to borrow against home equity to make investments. This can be achieved through a re-advanceable mortgage and has been promoted by personal financial planners as a way of significantly decreasing the time required to pay off a mortgage and the associated total interest cost. However, the notion of risk associated with the investment holdings is not emphasized. Using simulation we study the …