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You’ve been told to do one or the other ❌
But what if that advice is what’s actually slowing you down?
That extra 💰/month?
It could be doing double the work
✦ reducing your debt
✦ growing your investments
✦ creating tax advantages
Same money. Completely different outcome 🙌
📈 extra 1M in investment growth
💸 280K in extra tax refunds
🏠 faster mortgage pay off
This is another way our clients use the Smith Manoeuvre to get ahead 🙌
Comment “SMITH” to know how to set up your mortgage properly to do this 📩💪
Follow @brookelynnmortgages for more tips!
#investing #mortgagetips #homeowner #savingmoney #mortgagebroker
Transcript
Should you pay your mortgage off first or invest? I did a recent video on this where I explained that you, as a homeowner, can actually do an advanced mortgage strategy that will allow you to do both. And today, I'm gonna break down the real numbers of each scenario. So for numbers purposes, let's assume that you have a $500,000 mortgage, and after paying your mortgage payment, you have roughly a thousand dollars that you can either prepay your mortgage down faster or invest. So in scenario one, let's assume that you take that money and use it to prepay your mortgage. In this scenario, you would pay off your mortgage in seventeen years instead of thirty. So you're shaving thirteen years off your amortization, and you'd save about $157,000 in interest. Then once your mortgage is gone, let's assume that you take that thousand dollars plus the payment, the monthly payment that you no longer have, and you take all of that to invest for the next thirteen years. By year thirty, you'll have an investment portfolio worth about $786,000 Now to scenario number two. Let's assume that extra thousand dollars instead of prepaying your mortgage, you're going to start investing earlier. So a thousand dollars a month for thirty years. Your mortgage is still going to take you thirty years to pay off, and because of that, you are gonna pay four hundred and seven thousand dollars in mortgage interest. But because you started investing earlier, you're gonna have an investment portfolio worth about $974,000 Now here's where it gets interesting. Scenario number three, you do the Smith maneuver. So what you do in this case is you use that thousand dollars to prepay your mortgage. And if you have the right mortgage structure in place, you can set it up where tier principal paydown will actually open up on a home equity line of credit and you can reinvest that into the market. In this scenario, you'll actually pay your mortgage off in fifteen tier. And by year thirty, you'll have an investment portfolio that has grown to roughly $2,400,000 Now, before everyone rushes to the comments, there absolutely is a catch to this. We are assuming that you're investing both your principal pay down from your mortgage payment and that extra thousand dollars a month. So at the end of thirty years, you're going to have a $500,000 home equity line. So your increased net worth is not actually $2,400,000 It's actually 1,900,000 which is still significantly higher than either of the two scenarios. And there's also another benefit to the third scenario because you converted your mortgage into a tax deductible investment loan. You have also received approximately $281,000 in additional tax refunds that you would not have otherwise. So maybe your question shouldn't be, should I pay off my mortgage first or should I invest? It should be, how can I structure my mortgage properly no I can do both?
