We see celebs drop millions on mansions, but ever wonder if they actually pay cash? Let's check out Tom Brady's playbook and his Miami estate in Indian Creek Village, Florida – a.k.a. the "Billionaire Bunker" – to decode a key money move of the mega-rich: the mortgage.
Brady's $35 Million Mortgage and Refinance Play
Even though Tom Brady's net worth is reportedly over $500 million, DailyMail revealed he chose to mortgage the land for his mansion, rather than paying cash, with the option to borrow up to $17 million more.
So, Brady secured a $35 million construction loan for the 1.84 acre lot in June 2023. Could he have paid cash? Obviously. But here’s the play: by borrowing $35 million, he keeps that exact amount liquid. And it gets even more financially nuanced. Brady actually refinanced this loan with a new $35 million loan from a different lender at 5.63% instead of his original 8.25%. With his refinanced rate of 5.63% on a $35 million mortgage, Brady's estimated monthly payment would be around $199,300. Over a typical 30-year loan term, this would result in approximately $36.75 million paid in interest alone. Keep in mind, these are estimates – the actual loan term and specific details could differ. However, it underscores the actual scale of these financial decisions
Debt: Not Always a Dirty Word
A $35 million loan sounds like a lot, but that same amount invested wisely (think S&P 500 returns), could balloon to way more than that interest cost over the same period. We're talking potentially hundreds of millions more.
Brady's mortgage move isn't just for millionaires; it's a lesson in making debt work for you instead of against Student loans at low interest? Think twice before overpaying when you may be able to pay off a higher credit card sooner. Ultimately, you should always have a clear purpose behind your financial decisions you make and make sure that those decisions align with your long-term goals.
Tom Brady's strategic use of a multi-million dollar mortgage, now coupled with his attempt to sell the property after years of renovations for a staggering $150 million, offers a powerful lesson. Brady's strategy shows how the very wealthy use debt as part of a larger investment plan. By borrowing money to buy the property and fund the renovations, he's set himself up to potentially make a huge profit when he sells. If he gets close to his $150 million asking price, his return on investment, even after paying interest on the mortgage, could be enormous. This really illustrates that financial savvy isn't just for millionaires—it's a skill anyone can develop. Learning how to use debt wisely, along with making smart investments, can be a path to building wealth, no matter where you're starting from.
Which of these debt strategies do you like best?
Investing in yourself (education, skills)
Building equity by owning a home
Expanding or starting a business
Making strategic investments