Over the years I have been able to pay back most of my mortgage loan. Presently I have a condo on the South shore of Montreal. I am both content and frustrated by this loan situation. My frustration stems from all the sunk into my condo which seems to increase in value at the same slow rate of inflation.
To tone down my frustration, I have been using a margin account for my taxable stock holdings. Basically, a margin account allows me to use stocks as guarantee for additional stock purchases with funds I borrow from the broker. My broker charges me interest on this borrowed money, but since this expense is incurred to generate taxable revenue, the government allows me to deduct this interest.
My strategy is to borrow an amount equal to the value of my condo less the mortgage loan balance. This means about $140,000. When I sell my condo, I will simply pay off both the mortgage loan balance and the margin balance with my broker.
I deal with Interactive Broker. This online broker offers its margin account at an interest rate of 2.72% for Canadian dollar margin and at 3.41% for US dollar margin. These rates are much cheaper than the 3.95% interest rate my bank charges me for my mortgage secured line of credit.
In the end, I am in no hurry to pay off my fixed rate mortgage loan.
June is a big month for dividend and interest revenue in my portfolio. This year, my June revenue is $7,745. To reinvest this amount, I checked my asset allocation and stock allocation to identify which sectors my stockholdings are below my allocation targets. At this time, the following sectors are below target; Consumer staples, energy, technology and finance. Therefore, I added to my holdings the following stocks:
CCL Industries (CCL.B-T) Consumer staples
Brookfield Energy Partners (BEP -N) Energy – this is the American version of BEP.UN in Toronto
Helmerich & Payne (HP-N) Energy
Oracle (ORCL-N) Oracle
AFLAC (AFL-N) Finance
Until next month,