TDMP is an innovative mortgage plan where Canadians can reduce their amortization on their mortgages and at the same time save for retirement. The concept has being around for years and more recently came to light with the Smith Manoeuvre by Frank Smith. The Concept of the Smith Manoeuvre is similar but TDMP takes it a step further.
The mortgage holder is taking their non tax deductible mortgage and converting into a tax deductible mortgage. In essence as you pay down your existing mortgage you re borrow the money through a line of credit and invest into a portfolio of investments. Because you have re borrowed the funds from your property to invest the interest on the line of credit becomes tax deductible. You will now receive tax refunds cheques annually from the government. These funds can then be applied against your existing mortgage speeding up the process of paying down the mortgage and at the same time allowing you to re-borrow the funds and put into a investment portfolio. As the portfolio grows over time the breakeven point where you can redeem the portfolio to pay out the Line of credit and mortgage happens allot sooner than if you just paid your mortgage down the regular way. In most cases you can chop 5 years off your mortgage amortization and remember you are not paying anything extra out of your own pocket against your mortgage, no prepayments are needed. At that breakeven point the client has the option to cash in the portfolio and pay out the entire mortgage 5 years early or continue to pay the mortgage payment into the line of credit and in turn into the investment portfolio. The portfolio is now large in size and therefore will grow at a much faster rate. Over the next 5 years (25 year maturity date) which would have being the mortgage maturity date the borrower now has a investment portfolio large enough to pay out the mortgage/line of credit and have substantial funds remaining for retirement all achieved without any extra pre payments from their own pocket.
Ask me more about the TDMP and visit my website at www.bestratesmortgages.ca