TL;DR

This 10-point readiness checklist helps you pressure-test risk, documentation, and lender fit before you take a first Smith Manoeuvre draw.

Why this matters now

HELOC flexibility can feel simple, but FCAC and OSFI guidance both highlight the repayment and underwriting risks when debt grows faster than discipline.

A stronger pre-draw framework lowers the odds of expensive mistakes later.

10-point Smith Manoeuvre readiness checklist

  1. Document your objective and holding horizon before borrowing.
  2. Set a maximum leverage limit and stop-loss policy framework.
  3. Confirm readvanceable product structure and lender terms in writing.
  4. Run rate-shock and income-shock cash-flow scenarios.
  5. Create clean fund-tracing rules for investment-use borrowing.
  6. Separate personal and investment transaction pathways.
  7. Build quarterly documentation and compliance review cadence.
  8. Validate tax assumptions with qualified tax professionals.
  9. Compare at least one lower-risk alternative strategy.
  10. Pre-commit behavior rules for market drawdown periods.
Smith Manoeuvre documentation checklist for Canadian mortgage strategy planning
Documentation rigor is what turns strategy into something actually executable.

One bias to catch early

Overconfidence bias

many borrowers model upside returns in detail but leave downside cash-flow stress underdeveloped. Reverse that order.

Best next step

Sources