Where Sam starts
Sam owns her home, with a $400,000 mortgage at 4.45% and 25 years left, about $2,200 a month. Her rental brings in $2,000 a month and costs about $2,000 to run, so it breaks even. Her taxable income is $145,000, a marginal tax rate of about 43% in Ontario.
Every month
The $2,000 of rent goes straight onto her home mortgage. Because the mortgage is readvanceable, that $2,000 opens up again on her line of credit, and she borrows it back to pay the rental's bills. The line's interest (about 5% in this example) is added to its balance, so her monthly cash flow doesn't change.
Every spring
At tax time, the deductible interest turns into tax savings. Until her home mortgage is fully converted, Sam puts those savings on it as an extra prepayment, so there's less left to convert.
Where she ends up
After about 9 years her home mortgage is fully converted: about $281,500 of investment borrowing. She keeps making the same $2,200 payment toward it, plus each year's tax savings, and is completely debt-free in about 22 years. That's 3 years sooner than her original 25, without paying a dollar more.
~9 yearsto fully convert her home mortgage into tax-deductible borrowing
~22 yearsto be completely debt-free, 3 years sooner than her original 25
~$66,700in tax savings along the way
~$79,200stays in her pocket: 3 years of $2,200 payments she never makes