Jayson Lowe argues that paying cash for a house in Canada wastes opportunity cost, since your equity earns 0% while the bank profits. He recommends the infinite banking concept instead: becoming your own banker to control the flow of funds.
So why is paying cash for a house a lost opportunity? So I meet with clients regularly who pay off their principal residence. And they sit down, they say, hey, listen, I own this home. It's worth a million bucks. I don't have a mortgage on it. So you've got the house, but who's got all the money? Ask yourself, whose margin of safety am I increasing, the bank's or my own? You need to take control of that financing function as it relates to your needs so that you're not transferring the money away from you. You've changed the flow and you've got that money coming back to you. Your home, when it's encumbered by a mortgage is an asset, a stream of payments for someone else's bank. The equity that you have in your property right now is earning you a whopping 0%. You've got to take control of this financing function by embracing the process of becoming your own banker. The infinite banking concept.
