Episode 229: Mortgage Renewal, Refinance, Payoff? Your Guide for Mortgages in 2026

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Should you aggressively pay off your mortgage—or use it as a strategic tool to build wealth?

As a business owner, the mortgage decision isn’t just about rates and terms—it’s about behavior, tax efficiency, and long-term wealth strategy. In this episode, Jon and Kyle unpack their very different mortgage scenarios to show how your financial moves can either limit or unlock new opportunities. Whether you’re up for renewal or sitting on a chunk of equity, the real question is: what’s the smartest next move for you?

Listen in to discover:

1. Why refinancing your mortgage might be the key to filling your TFSA—without draining your corporation.
2. How extending your amortization can be a powerful move for financial flexibility (and not just a debt trap).
3. A practical breakdown of when it makes sense to not pay off your mortgage—even if you could.

Press play now to rethink your mortgage as more than a payment—and start using it as a tool for long-term growth.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX.
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

For Canadian business owners, making smart mortgage decisions goes far beyond interest rates—it’s about aligning renewal strategies with a broader Canadian wealth plan. By integrating behavioral economics with financial planning tools like tax-free savings accounts, RRSP optimization, and home equity leverage, entrepreneurs can craft a personalized path to financial freedom in Canada. Whether you’re weighing salary vs. dividends, exploring real estate investing or renting, or balancing personal vs. corporate tax planning, the key lies in building financial systems that support long-term wealth. From early retirement strategies and modest lifestyle wealth to corporate structure optimization and estate planning, every move—especially around mortgages—impacts your investment buckets and legacy planning. This episode unpacks how tax-efficient investing and financial diversification in Canada can turn your mortgage into a powerful tool for business owner tax savings, passive income planning, and ultimately, financial independence.

Transcript:

In this episode, we want to get personal. We want to talk about mortgages. We want to talk about mortgages as business owners, as entrepreneurs, and we have two different scenarios we’re going to unpack here today, and they are actually our scenarios. Kyle’s scenario with his mortgage is different than my mortgage scenario. It’s likely could be similar to you. One of those could be similar to your mortgage scenario, or maybe you’re in this position where you don’t have a mortgage.

and you’re wondering what you could be doing alternatively. And that’s actually, we’re gonna unpack that as well. So we’re gonna dive into mortgages and how to think about these really important things that are in our lives as business owners. Okay, let’s get into it. Because specifically, we are in two different situations. So let’s just unpack one at a time. And let’s start with yours because…

I think yours is probably the more common situation is when we come into renewal time. It’s like, hey, my mortgage is up for renewal. What do I do? How do I do it? You know, should I just roll with the punches? Do I shop around? Do I extend? Do I kind of double down on rates? Do I want to pay this thing off as fast as possible? Do I want to stretch it out? Let’s talk about your situation and what your choices are. So give us the lowdown. You know, you don’t have to give us specifics on numbers, but just give us specifics about like,

renewal time and what some of the choices you made for your personal mortgage. And keep in mind folks, Kyle and myself, we’re business owners so we have our corporations to think about. These are things that you do need to take into account because they can make choices different because you have optionality.

Hmm, 100%, 100%. And, you know, and the hardest part here is, you know, we always like to talk on the show about like, really the math, right? Former math teachers, you know, guys that want to play with the spreadsheets and really answer questions of like, what does the math say? But then there’s the other side of like, behaviorally, like how do how do these actions make us feel? And we know that from research, a lot of what we do and what

drives us is actually emotional. So when we look at behavioral economics, the decisions we make oftentimes are different than what the math says we should do. But I think starting with the math is really important. we articulate on this show quite a bit, especially for our incorporated business owner friends, that it doesn’t make a whole lot of sense to be taking out a significant amount out of the corporation, paying a higher amount of tax personally in order to say,

aggressively pay down a primary home mortgage, right? So like that’s something we’ve advocated on on previous shows. However, there’s scenarios where you know, sometimes paying down the mortgage might make sense. Now in my case, we’ll start there because I just went through a renewal coming out of the pandemic and actually in the pandemic was renewal time for me in 2020. It was December 2020. I basically lucked out and got an amazing low fixed rate.

Only for five years, sadly. Like now, if I could go back, I probably would have more aggressively looked at what the 10-year fixed rate was at that time, if I was thinking. All-time lows, right? And thinking, man, are these lows going to last forever? And of course, we don’t know. But the reality is that historically, chances are that we’re going to see rates going up. And they did go up. So I just went through this renewal. And unfortunately,

Well, you’re all time lows,

As you look at the rates and if you only look at the rates, you’re probably going, shoot, I now want to aggressively pay this thing off because now fixed rates are more around 4%, you know, as we’re recording this. Variable rates, you can get them in the prime minus, you know, 0.4 to, I was lucky and got closer to 0.7, I believe, seven or seven five, something like that. And I went with the variable rate.

on this particular renewal. But what’s really important for us to kind of recognize is, you know, do we just renew and move on? Or is there any other moves that we could make? Now, you know, if you’ve listened to some of the early episodes of the podcast, you’ll know that we had a heavier waiting in real estate over our lifetime. And as former teachers, had pensions. So

We had pensions alongside and therefore we were scaling into quite a bit of real estate. So we never really focused a whole lot on the tax-free savings account because we were taking a lot of our money and putting it right into real estate assets. Whereas now things have shifted for us over the last handful of years. Now with our operating businesses, now that we pay ourselves out of our operating companies.

You know, it kind of puts us in a tougher spot when we look to start putting money into something like a tax-free savings account that I actually opted to take a little extra at renewal time to refinance and maximize the use of any additional space we had available in our tax-free savings accounts for myself and my spouse. My spouse is also a teacher, so she’s contributing to a pension.

and any of those additional funds now that we’ve been sort of trying to diversify a way. I don’t want to say away from real estate, but really just trying to increase our public market exposure up towards what we have going on in the equity and real estate. You know, it’s a really important move for us. So what we had actually done was we’ve actually done a refinance, taken some of that money, put it into the tax free savings accounts. Now, some people would say, well, now you’re paying interest.

in order to put some of that money into the tax-free savings account. However, as business owners would know, if I was to take an extra 50 grand out of my corporation in order to put into tax-free savings accounts or even 25,000 or whatever that number is, I’m gonna be taxed at a heavier personal tax rate in order to get those dollars in. So I’d much rather lean on some equity slowly. I don’t wanna say slowly, cause we’re gonna take that big chunk, put it directly into the tax-free savings account.

and then get it invested in the different assets that we’re looking to invest in the private or in the public market. I should say as we go and we’ll hack away at that mortgage, which I’ve also extended it to a 30 year amortization.

Okay, tell me about that. Why extend it to a 30 year mortgage? Because it’s like, it goes against what most people would think. I know I don’t necessarily want to pay this off, but do I really want to stretch it for another 30 years here? Because mentally, when you think about the behavioral part versus the math part, because obviously the math part says the payment will be lower, but the behavior part says, 30 more years of mortgage.

Yeah, yeah, totally, totally. And you’re absolutely right. And I’ll be honest and say like, you know, doing it, even though mathematically I look at it and say, well, if let’s say every additional dollar I take out of my corporation is gonna get taxed at 40 ish percent, 50 ish percent, depending on how much we’re pulling out those dollars, you know, I’m left with 50 or 60 cents in order to put into the tax free savings account or

to aggressively pay down my mortgage. So that’s kind of like not a great position to be in. So why stretch it out to 30 years is it gives me a little bit more optionality. We talk about optionality on the show all the time. My plan isn’t necessarily to stretch it out for 30 years, but I do know that my minimum payment that I have that I’m required to pay is now going to be lower because it’s a 30 year amortization, but I still have the opportunity

to pay extra dollars, if it makes sense, if the budget makes sense at the personal level, in order to open up additional equity in my home that I could then potentially put into other investments, be it into a non-registered account, be it into private investments, or be it into additional real estate opportunities that might present themselves down the road. So I wanna keep that payment as low as possible.

However, in my mind, I have a budget set, and you’ll be proud of me there, John, because I’m budgeting here, but I have a budget set that I’m planning to actually make larger payments in order to increase the equity available on my home equity line of credit. This is a re-advanceable mortgage, so as I put a dollar of extra principal down, I’ll get an extra dollar of equity in the HELOC. And my plan is for any extra dollars.

that I put on this mortgage, I’m going to then re-borrow Smith maneuver style in order to invest in non-registered investments. So again, not necessarily going to say it’s gonna be into this ETF or that ETF, but it’s not gonna go into my RSP, it’s not gonna go into my tax-free savings account, it’ll go into…

taxable accounts so that I then can write off that extra dollar of interest. shouldn’t say dollar of interest, the interest that’s generated or that I have to pay on that dollar that I’m going to re-borrow from equity.

Yeah. So what made you? What’s the motivation here?

Yeah, like honestly, it’s a great question. I think there’s two things that always motivate me. One is I like optimizing and I do want to maximize my investments across various asset classes, right? So we, again, we’ve got real estate down. We feel good about the real estate. We’ve got more money in the public markets than we’ve ever had before. So we’re continuing to do that. We’re doing it with various strategies.

equity and income strategies that we play with. And we also have our permanent insurance, which essentially lives inside of our holding company. So we’ve got a variety of assets going on. We have some plans to do more private investments over this next year. But ultimately for me, I’m looking at this and saying, you know, I have this home, I have assets and I have cashflow in various.

places again a lot of our cash flow is inside the corporation so it’s not directly accessible but at a personal level when we’re able to re and I’m going to say reinvest some of the equity that’s locked up in our home we put ourselves in a unique position where our home actually has a greater rate of return when we have a larger borrowed amount against it because we have less of our own dollars in there growing at

whatever that rate of return is on that primary residence. It also allows us to benefit from the long-term ⁓ asset growth inside different accounts. So again, from the refi, putting it into the tax-free savings account, that’s gonna grow tax-free. I can pull it back at any time, which the goal is not to pull it back, but there is a behavioral challenge there, right? When you see a large mortgage amount or a large HELOC amount sitting there,

It’s really difficult unless you see right next to it what the balance is of all of these other investments to make you feel like, ⁓ things are going to be okay. So whether you do that in a spreadsheet, whether it’s like all in the same bank where you can see, you know, you’re checking your savings, your investments and your mortgage, that might make you feel a little bit better. But ultimately at the end of the day, that’s usually the biggest challenge that we have to overcome is the behavioral, you know, sort of want. for us to pay that mortgage down and just not owe anything. So again, it doesn’t make you right. It doesn’t make you wrong. If you choose to pay down that mortgage completely for us, we just look for ways that we can do some optimizing, but we also want to be obviously cautious in the types of investments we’re making so that a big draw down in the public markets, for example, doesn’t have us wake up one day and make a bonehead move and pull everything out.

Right, now that move that you, you know, the tip that you just gave to think about, you know, extending your mortgage or doing what you did is taking more, you know, like you took more from the lender than you needed to refinance or to renew. You refinanced and took more so that now it looks like you have an even larger loan like that, you’re right, that mentality of going, my gosh, like a bigger loan hurts, but then,

having a system or your net worth statement staring at you in the face every month can be super helpful to go like, I going in the right direction? Because even though you made that move, you’ve got these other things that you’re comparing against to say like, actually this month I’m higher than I was before because I made this move. And that is an important motivator to keep you paying down the mortgage at the normal rate, but also you know, taking note that doubling up that investment or making that larger or ⁓ larger payment on the mortgage and then investing the difference there like that, that will show you month to month to month that you made the right move and that you’ll you’re you’re continually growing your net worth and your bottom line. so I like that tip. And I think that’s a great tip for us to kind of take forward.

Yeah. And I think like something just to kind of like leave people with, especially our incorporated business owner friends, like if let’s say you had room in your tax free savings accounts, I’m just going to use a hundred thousand dollars as the example. You know, we’re using numbers just to help you try to grapple with some of these decisions. If you have a hundred thousand dollars of room in that tax free savings account and say your mortgage is up for renewal. Okay. Or you’re close to renewal time or

Maybe even you have ⁓ a HELOC available with 100,000 available. I have two options. If your plan is to fill the tax-free savings account. Now, the reality is the tax-free savings account is one of the, I would say, greatest gifts we have aside from the primary residence not having any capital gains tax on it. That’s a great gift, but the second one is the tax-free savings account. Even if you’re…

in your mind going like, I don’t really like the public markets or I want to be in real estate or I want to, you know, do something else. I want to be in private markets, whatever it might be. That bucket is such a great bucket. And, you know, to have room available if there’s any way that I can fill it up, but doing it in a logical way is the greatest, the greatest way you can do it. So for example, as a business owner, if I was to pull money out of my business in order to put

100 grand into a tax free savings account, for example, if you take it out as a salary, and let’s say you’ve already got a salary that’s significant enough, and now you’re taking an extra 100 grand as a bonus, for example, you’re going to pay 50 % on that those dollars that come out. So you’re going to need 200,000 from your corporation to come out because 100,000 of it is going to get eaten up in tax in order to fill that bucket. So you’re now down

$200,000 from your world, your assets. Whereas if I pull $100,000 from my home, I’m literally just pulling the hundred and then I have to essentially deal with the interest. Let’s pretend it’s 5%. I have to pay $5,000 in the first year on interest. But remember that number gets lower and lower if we slowly knock it down. You could be more aggressive with it. or less aggressive. If you’re too aggressive with knocking that $100,000 down, then you’re still gonna be paying a lot or a significant amount in taxes from your corporation. So finding a balance that works for you is gonna be really important to do. Now, some of you are gonna say, you know what, Kyle, if I’m taking the 100, I’m gonna take it as a dividend so that I’m gonna probably cap out at somewhere around 39, 40%. Okay, the math’s still the same, right? Same idea. We gotta take a lot of money out.

Right. Same, it’s the same. in order to fill up that tax-free bucket. as an incorporated business owner, if there’s ways that you can be a little bit more strategic, that will definitely help you along. Now, for me, I needed that extra plan. So the extra plan for me is that I added it to my primary mortgage. I can’t deduct any interest off of my taxes for this extra balance. So in my mind, any additional cashflow that we have in our world,

I’m gonna put on the primary mortgage in my mind, pretending like I’m funneling or fueling my tax free savings account, because I’ve already done it. I already borrowed the money. I’m just kind of paying my tax free savings account bucket back in order to do so. But at the same time, I’m gonna re borrow those dollars and put it into a non registered account. So that’s my plan.

Right. for this particular scenario. And again, it wasn’t a hundred thousand. We use some example numbers here, okay? So, you know, don’t hold us to the numbers. We’re just trying to give you a sense of what that might look like and sound like for you. We just want to deter people from getting too aggressive, taking too much out of the corporation at any one time, whether it’s to pay down the mortgage or whether it’s to fill up the tax-free savings account. We still want you to get that bucket full, but let’s get creative on how we do it. Now,

As an aside, the tax or the RRSP, you take a salary and you take 100 grand out as a salary, even though you’re going to lose half of that amount. Remember, if you dump 100 grand into the RRSP, you’re going to get all that money back. OK, so there’s ways where it can make sense for the RRSP to take additional dollars out of the corporation because you’re going to get that back. But keep in mind, you want to be more strategic about it and decide whether

dumping all of that money into the RRSP is the right move. We call that a little bit of a higher security prison than the low security prison that is your corporation. So really just finding a strategic way in order to play with those buckets is gonna be a really important move. And then most importantly, deciding on your goals down the road and making sure you’re comfortable with it behaviorally is gonna be the ultimate most important move because if you can’t stomach it, then obviously you’re going to do nothing and nothing isn’t going to help you get to where you want to get to.

All right, so let’s talk about my scenario because I think we, in a way, you’ve given some tips that I think are helpful for my scenario already, so we can just maybe touch on those specifically. But in my scenario, I’m at a point where, you know, you think about background, like ⁓ Kyle and I have the same corporate structure, we have all the same pieces at our disposal. However, I’m in a position where I,

tomorrow if I wanted, know, waiving the fees, I could pay my mortgage off, you know, like, because we pay ourselves a little bit more from our corporation and salary, so we can take advantage of our RSP contributions and, and, and kind of fill that bucket up, like what Kyle was saying, you know, I could decide, you know what, I don’t want to pay myself the RSP, I just want to pay the mortgage off because like mentally that might make sense to me, like it just feels right. So we’re in a, I’m in a situation where my mortgage is very low.

And coming into, I’m in the middle of my term. So it’s like, I’ve got a couple years left on my term. have a variable mortgage, you know, a rate right now. And so we’re gonna turn to Kyle and Kyle to help like what, in this scenario, if I’m in my, I’m not at refinance time, I have not yet refinanced or I’m gonna come into refinance time, what are some of my options knowing that?

I could go mortgage free because like some part of your brain, you got like the devil on your shoulder and you got the angel on your shoulder. And it’s like one of those people is saying like, pay the mortgage off. You know, that’s like, it’s like mentally, you know, you’ve got that snowball effect. I was thinking like Dave Ramsey snowball effect where it’s like pay off these things to generate habit for doing other things. And that can pay off down the road because in there’s no wrong answer here. Like we could pay the mortgage off. And then now that frees up.

Sure. the amount of money that I was dedicating to the mortgage each month to do more. Like I put that in my tax-free savings account every single month. I can build that way, right? Or I can then start borrowing more from the line of credit to do the same thing you just said about filling that tax-free savings account up. So there’s like that option. But the other option is like come renewal time, I could extend like you have, but you’re taking a small amount of loan and extending it for a longer period of time.

In your opinion, your guidance here, what some moves I should make.

Yeah, like I would say it really all comes down to how optimized you want to be. So it’s like this constant push and pull between the math and between like how like like how do you want to feel and and how do you feel in terms of your own wealth journey? Now you and I, we had a conversation over the weekend where, you know, you were sort of stating that like you could

pretty much put it in cruise control and you should be able to be at your financial freedom number, you know, over the next handful of years, like with and we’ll say with with room, you know, meaning like you’re not like concerned. So the real question then becomes is like, is it worth it to you? You know, and I think that’s like one of the biggest things that only you as the individual can answer. And this is for everyone who’s listening and everyone who reaches out to us.

You know, a lot of people like come and they’re asking like for us to give them the answer. And in reality, they have to come up with their own answer. Like I am an optimizer, like it motivates me. Like I’m always intrigued. I’m always curious, but I’m also emotional. So like a lot of times, like I have these big goals to optimize doing this, this and this, but then sometimes, you know, to get that process down, to make it like a structure.

so that I don’t have to think about it and just make it happen and know it’s gonna do what I want it to do. That’s the hard part here. And I would argue for someone like you, John, you might choose to go, you know what? You’ve got a line of credit. You’ve got a significant amount of equity in your home. You could take a chunk of that equity and fill up or top up the tax-free savings account so appropriately and then slowly pay back that HELOC amount.

You could literally go the other angle and go, I’m ready to just like completely make this mortgage gone. And I’m comfortable with the assets that I have. Am I optimizing? Like, am I going to be the greatest, you know, investor version of John? The answer is, well, no, not comparatively, but the real question I think comes down to like, how does it make you feel? And like, if you get like this dopamine hit when you pay off that mortgage and

Again, I would always argue for people whether they wanna have a balance or not on their home. It’s like have the equity there so that if you do need it, do want it, do have an opportunity, you can use that as your opportunity bucket, right? So for a lot of people at a personal level, their home equity line of credit is their wealth reservoir. And that’s not a bad move. Like we can’t argue with you about that. So I would say for someone like yourself,

giving yourself some time to think the beauty is is that you’ve got a couple years between now and your refinance date. Maybe you do want to pull a little bit extra to fill up those tax free savings buckets or to do maybe some renovations in the home or whatever it might be. And then you might want to apply a more aggressive pay down strategy with re borrowing for any additional dollars that you were going to put into the market. So for me, the way I look at it as I go, you know,

If I’m gonna take a dollar and it’s gonna go into an investment, and we’re talking at a personal level here today, right? So today we’ve been talking all about the personal level. If that dollar’s gonna go into investments anyway, I’m gonna try to think of a way that I can make it more tax efficient. So that’s where I’m gonna pay down my non-tax deductible mortgage interest, which is what I’m doing now. I know there’s no benefit.

I put every dollar I put in the tax-free savings account, there’s no tax benefit there, which is why I borrowed the big chunk, chucked it there. I know that over a year’s time, I should be able to get a better return regardless of what I’m invested in inside the tax-free savings account. So the arbitrage between what I’m paying and interest on my primary mortgage, I should be able to beat that. And that’s where some people might like feel more comfortable with borrowed funds going into something that has more predictable income coming in.

So for example, like ⁓ an equity fund that is high income, even though it may not do what the S &P 500 does, it at least has like monthly income coming in. So you can see that, hey, my interest was, I don’t know, I’ll just make up a number, $200 a month on that borrowed amount, and I made $400. So now you’re going like, I feel good about that, and that helps you sleep at night. That’s probably better to get a 9 % return where you see the cashflow going in.

then maybe the market’s up, maybe the market’s down and there’s no cashflow and you’re always wondering whether you did the right thing. So there’s all kinds of ways that you can do it. But I would say for someone like yourself, if you’re eager to top up the tax-free savings, I would just re-borrow on a HELOC, make sure it’s not mixed in with any borrowed funds, you know, that you’ve been using for Smith maneuver, for any real estate purchases you’ve made, anything in non-registered accounts, make sure it’s on a separate segment.

And you could borrow that chunk, chuck it into the tax free savings account and slowly hack away at it. Or you just choose to go, you know what, keep paying down the mortgage as is for now. I’ve got a couple of years till renewal time, slowly feed any additional capital into the tax free savings bucket and come renewal time, you know, kind of plan for yourself on what’s my game plan. Do I want to reborrow against my home?

Or am I comfortable with where I’m at? And again, you’re not right, you’re not wrong. It’s just more or less, what are your goals? And does sleeping at night, is that one of my goals that I want? I just wanna sleep a little bit better at night so that if and when the market drops, it just doesn’t matter to me all that much.

Awesome, awesome tips there. And we want to know what your thoughts are. Everyone’s got thoughts on where they are and what they stand. If you’ve got any recommendations, hit us on up on all social media channels. are Canadian Well Secrets. Actually, on Instagram, we’re Invested Teacher. So look us up on our social media and ⁓ fire us a comment on this topic, this episode. We’d be loved to engage in the DMs over there.

Just as a reminder, the content you heard here today is for informational purposes only, not construed as legal, financial, or other advice. One more reminder, Kyle Pierce is a licensed life and accident and sickness insurance agent and the president of corporate wealth management here at Canadian Wealth Secrets.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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