Step-by-step Smith Maneuver Guide

Table of Contents

• Overview

• Prerequisites

• Smith Maneuver Setup using National Bank

  • Pros

  • Cons

  • Step 1

  • Step 2

  • Step 3

  • Step 4

• Interest Capitalization

• Important Notes

Overview

Smith maneuver (SM) is a strategy of pre-paying your mortgage, then taking out the pre-paid amount out via a HELOC and use it for investment, effectively making your mortgage interest tax deductible. The goal is to pay down your regular mortgage as soon as possible using the tax rebate, and at the same time earn higher investment return over the long-term.