Can You Use Your Home Equity to Invest?

For most Canadians, the house is their biggest asset. And while that equity often just sits locked inside four walls, it can also become a powerful springboard to financial freedom. With the right strategy, your home can do more than provide shelter — it can help fund investments, accelerate retirement plans, and create new opportunities for your family.

The question is: should you use your home equity to invest?

What Does It Mean to Use Equity?

Home equity is simply the difference between your property’s market value and what you owe on the mortgage. Most lenders will let you borrow up to 80% of that value. That borrowed portion can then be deployed into other investments.

Example:

• Home value: $900,000

• Mortgage balance: $500,000

• Equity available at 80% loan-to-value: $220,000

That’s real investment capital unlocked from your home.

The Strategy Behind It

Borrowing to invest is often tied to the Smith Manoeuvre, a method that converts non-deductible mortgage debt into tax-deductible investment debt. Instead of waiting 25 years to pay off your mortgage before investing, the strategy lets you start now — using your payments to build an investment portfolio alongside your mortgage paydown.

The key principle: as long as your investments generate more after-tax return than the cost of the loan, you’re ahead.

The Risks to Consider

Leveraging equity isn’t free money. A few things you must think through:

• Cash flow: Can you comfortably handle payments even if rates rise?

• Investment risk: Equity should go into income-producing, relatively stable assets — not speculative bets.

• Discipline: Using home equity for vacations or consumption creates long-term debt without long-term benefits.

Other Smart Uses of Equity

Even if you’re not ready for leveraged investing, equity can work for you in other ways:

• Consolidate debt at lower rates than credit cards or unsecured loans.

• Maximize RRSP contributions, reducing taxable income while growing retirement savings.

• Fund an FHSA for yourself or your kids to get tax-free growth toward a first home.

Bottom Line

Yes, you can use your home equity to invest — and many Canadians do. The key is making sure you pair that leverage with investments designed for steady income and manageable risk. Done right, your home can become more than a place to live — it can be a wealth-building engine.

Ready to get started? Contact our investment team today!

Disclaimer:
This article is for informational purposes only and does not constitute investment, tax, or legal advice. Borrowing to invest involves risk and may not be suitable for all investors. Past performance of Mortgage Investment Corporations (MICs) is not indicative of future results. Interest deductibility depends on individual circumstances and current CRA rules. Investments in MICs are offered under prospectus exemptions to eligible investors in jurisdictions where permitted by law. Readers should consult with a licensed financial advisor and qualified tax professional before acting on any strategies discussed.