Short bonds for DIY mortgage?

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newguy
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Short bonds for DIY mortgage?

Post by newguy »

I was wondering if it's possible to short a bond in order to create a virtual tax deductible mortgage.

-What if I had $104k in my TD account.
-They say 104% margin for shorting bonds.
-I short a $100k 20yr-ish govt bond at 2.5% and make all the interest payments (shorters have to pay the interest).
-I now have $204k in my account but only need $104k.
-Withdraw $100k, buy house.
-I now have a 20yr, locked in, low rate, open pay, virtual mortgage.

Do I deduct the reversed interest payments from the positive income in the account? Note that with about $150k in the account initially, I could buy all dividend payers that are eligible for 30% margin and still have enough for the bond margin.

newguy
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