Your Guide to The Smith Manoeuvre Simplified
Would you like to know a way to make your mortgage interest tax deductible, helping pay down your mortgage faster? Welcome to The Smith Manoeuvre Simplified. Your guide to paying your mortgage off sooner using the equity in your home.
The Smith Manoeuvre is a Canadian strategy that lets you use the equity in your home to invest and save on taxes—without changing your regular mortgage payment.
How It Works
- Pay Down Your Mortgage
Every mortgage payment reduces the principal you owe. - Re-Borrow the Principal
A special “re-advanceable” mortgage automatically frees up the same amount on a home-equity line of credit (HELOC). - Invest the Borrowed Funds
You re-borrow that principal and put it into investments that can generate income, such as stocks, ETFs, or mutual funds. - Claim the Interest as a Deduction
Because the borrowed money is used to invest, the interest on the HELOC is tax-deductible. - Use Tax Refunds to Accelerate
Apply your annual tax refund to the mortgage or reinvest it to grow your portfolio faster.
Why People Like It
- Grow Wealth While Paying Down Debt – Your mortgage balance shrinks while your investments have the potential to grow.
- Tax Efficiency – The HELOC interest becomes deductible, creating annual tax refunds.
- Faster Freedom – Redirecting those refunds toward the mortgage can shorten the time to eliminate non-deductible debt.
Key Risks to Understand
- Leverage – You’re borrowing to invest. Markets can fall, but the loan remains.
- Discipline Required – Success depends on tracking the numbers and sticking to the plan.
- Professional Guidance – A mortgage broker, accountant, or financial planner who understands the Smith Manoeuvre is essential.
Bottom Line
The Smith Manoeuvre isn’t magic—it’s a structured way to turn “dead” home equity into a tax-deductible investment loan while you pay down your mortgage. If you’re organized, long-term focused, and comfortable with the risks, it can accelerate both your mortgage payoff and your investment growth.
Next Step:
Curious how it might work with your numbers?
Download my free Smith Manoeuvre calculator or book a no-pressure chat to walk through the strategy for your specific situation.