So my HELOC is at 3.35% now, about $250K in room. I'd like to use only $100K as a precaution, I can handle losing the money. Looking at bank stocks etc. the dividends paying out would cover all the interest on the loan. I have a decent savings rate, I could pay off the loan with time from diverting savings.
Can someone help me with figuring this out with respect to tax benefits? I'm viewing this as if I buy a bank portfolio paying out 4.5% dividends and there's no capitol gains/losses I should be up $2000/year. It seems too easy though.
After RRSP, splitting, deductions etc. this is my marginal tax bracket.
Income bracket Income Capitol gain CDN Dividend eligible Non-Eligible
over $44,701 up to $89,401 35% 17.5% 12.39% 24.29%
Thoughts? concerns? Please, this is in Canada, Canadian tax rules.