vendredi 25 septembre 2020

Mortgage rate under 2%

If you own a house, you can now have access to money for almost nothing. 

In Quebec, you can now have a 5 years mortgage at a rate of 1,79 - 1,99%. 

Do you realize? Rates have never been so low! Thanks to COVID and all that money spent by the governement. The ship is sinking but even in these circumstances, someone will take advantage.  

In that ultra low rates context, paying down debt makes no sense (if you don't have too much debt, of course). If you have too much debt, you should pay it and, more than that, you should never have borrowed that much money. Kick your ass and get your things together.  

Of course, the stock market is not that cheap (but probably not overly expensive). But why not getting a 50 000$ mortgage at 1,8% and invest that money on the market? Plus, you can deduct the interests on your tax declaration (at that rate, the deduction won't be that exciting, though). If you can manage to get a 10% performance on the stock market, you'll take a lot of advantage of that situation. 

Imagine that: you're 25 years old, you have a house and your mortgage can be raised by 50 000$. Do you realize how helpful will be that money on your portfolio in the long run? OK, you'll have to pay more on a mensual basis, but you'll get 50 000$ for almost nothing. And your small portfolio will take a very interesting proportion overnight. 

I believe that it's better than a margin, because the rate is lower and you're not exposed to a margin call. On a psychological level, it's also quite positive to know that your 1,8% interest won't change for at least 5 years. 

That advice is for those who know how to invest. 

Actually, I'm always writing to people who know how to invest. I assume that the others are somewhere else. I don't know where. Probably on Tik-Tok. 

1 commentaire:

  1. How do you get a mortgage loan if you invest in stocks ?
    Wont the bank make sure you invest in a house rather than stocks ?
    I have checked today for a 50k personnal loan and its between 5 to 10% interest rates rather than 1.5/2%. Does the bank would track what you do with the money ?