Lowest Mortgage Rates Ever! Time to put the equity to work for you!

Mortgage rates are droppingThis article just posted by CBC outlines some of the incredibly low interest rates that are currently being advertised by Canada’s big banks.

So what does this mean to you? If you are like many Canadians, you have a good chunk of equity just sitting there doing nothing. Now conventional wisdom says to pay down your debt. The thing to remember is there are two kinds of debt; good and bad.

Bad debt is debt on liabilities, things that don’t make you money or even worse, cost you money. Good debt is money owed on assets that earn you more money than the debt costs you. In essence, you make money off of the banks money.

So let me ask you this: If you could borrow $50,000 at 3% interest it would cost you about $1500/year. What if you invested that borrowed money and the investment paid you over $4500/year? I would think that sounds pretty good to me!

This is a simple example of leverage, using other people’s money to make money. The wealthy do this all the time and the middle class is too afraid too.

The funny thing is, you are already involved in this investment. The sad part is, you are the one lending your money out at 3% and the other people are making money off of you. You can read more about how banks make their money here.

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