← Rental cash damming · Other strategies
Cash flow diversion
Keep investing the same amount, and make it tax-deductible
If you already invest each month, you can send that money to your mortgage first and borrow it back to invest. You end up with the same investments and the same monthly cash flow, but your mortgage turns into borrowing that may be deductible.
How it works
A small change in the order your money moves.
Pay the mortgage first
The amount you’d normally invest goes onto your home mortgage as a prepayment.
Borrow it back
With a readvanceable mortgage, the same amount opens up on your line of credit.
Invest as usual
Borrow that amount and invest it in a non-registered account, in income-producing investments.
Tax time
Interest on borrowing used to earn investment income may be deductible. Your tax savings can go back onto the mortgage to speed things up.
Tax Savings Preview
About two minutes, and round numbers are fine. You’ll see a range, not a promise.
Where should we send your estimate?
Your results show on the next screen, and we’ll email you a copy.
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Assumptions we used
The numbers you entered are your own. These are the assumptions we added, and your Blueprint sets each one to your situation.
Want your custom Blueprint?
You have your range; your Blueprint fine-tunes it. Start with a free strategy call. Once the $500 Blueprint fee is paid, we go through your financial details in more depth and build scenarios around your goals.
- Your overall projected net wealth improvement, including your investments’ growth and income
- Side-by-side scenarios: putting your tax savings on your mortgage, or investing them at a rate of return you choose
- Every assumption talked through with you and set to your situation
- Anything that needs review before you start, like a past refinance or your mortgage structure
For illustration only. The range uses the numbers you entered and the assumptions listed above. Results aren’t guaranteed and will change if rates, property values, income or tax rules change. This is not advice, an official Blueprint or an offer of credit.
What it could look like
An illustration using the same Tax Savings Preview math. Not a real client.
Illustrative example
Someone investing $1,000 a month
The starting point
Jamie has a $400,000 home mortgage at 4.45% with 25 years left, invests $1,000 a month and has a marginal tax rate of about 43%. The line of credit is at 5%.
Each month
The $1,000 goes onto the mortgage first, then gets borrowed back and invested. Jamie invests exactly as much as before, with no change to monthly cash flow.
The result
Jamie’s home mortgage is fully converted to deductible investment borrowing in about 14 years, and the tax savings grow from about $140 in the first year to about $1,300 by year five. Investment growth and income come on top of this and aren’t counted here.
What to know before you start
Cash flow diversion is simple day to day, but it rests on a few rules.
- It needs room to prepay. Your mortgage has to allow regular prepayments, and a readvanceable mortgage makes the borrowing-back automatic.
- Non-registered investments only. Interest on money borrowed for an RRSP, TFSA or FHSA isn’t deductible, so this works with taxable investment accounts.
- The investments need to earn income. To support the deduction, the borrowed money should go into investments that reasonably could pay interest or dividends.
- You’re investing borrowed money. Markets go up and down while the borrowing stays, and line of credit rates are usually variable.
- It’s long-term. The conversion builds over years, and it’s best suited to people who already invest regularly and plan to keep doing so.
How we work together
We start free, and you decide at every step whether to keep going.
- 1
See your range
Try the Tax Savings Preview above.
- 2
Free strategy call
We get to know your situation and see whether cash flow diversion is a fit.
- 3
Your custom Blueprint
$500. Scenarios built on your real numbers, reviewed with you on a call.
- 4
Implementation
If you go ahead, your $500 is credited toward implementation.
Questions
Do I need to invest more than I do now?
No. The point is to invest the same amount, just routed through your mortgage first.
What if I only invest in my TFSA or RRSP?
Those accounts don’t work for this strategy, because borrowing to contribute to them doesn’t create deductible interest. We can talk about whether a non-registered account makes sense for you.
What happens to investment income?
Dividends and interest can also go onto the mortgage and be borrowed back to reinvest, which speeds up the conversion. Your Blueprint includes this.
Is it legal?
Yes. Interest is generally deductible when borrowed money is used to earn income from property, such as interest or dividends. The CRA’s guidance in Income Tax Folio S3-F6-C1, Interest Deductibility looks at how the borrowed money is used, which is why clean tracking matters.
Can it be combined with other strategies?
Yes. It pairs well with rental or business cash damming, and with a debt swap if you already have non-registered investments.
Other strategies
Every situation is different, and some of these can be stacked together. We’ll talk through which ones fit on your free strategy call.
Rental cash damming
Your rent pays down your home mortgage while the rental’s bills are paid with borrowing that may be tax-deductible.
StrategyBusiness cash damming
For self-employed people: your business income goes on your mortgage and your business expenses are paid with deductible borrowing.
StrategyDebt swap
Use non-registered investments to pay down your mortgage, then borrow to reinvest, so the interest may be deductible.
StrategyOffset mortgages
An all-in-one account where the money you keep in it lowers the balance you pay interest on, every day.
Already investing every month?
Let’s see what routing it through your mortgage could do.
Privacy policy
Last updated November 2026.
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