The key is paying off your mortgage as quickly as possible, no matter what technique you use. This technique may be quite a bit riskier than what most people would be able to stomach. However, it would be an interesting way to build assets in the equity market while leveraging your house.
How about doing the same thing with your car? My guess would be the interest on a bank car loan would be too high for any rate of return in stock to matter, and it's probably better to just run a margined account.
Comments from a Bill Cara blog reader:
As to your point about owning vs investing in the stock market, I've just done a little reading about how to do both. In Canada we can not deduct the interest on our mortgage. Fraser Smith (from Victoria, BC) has come up with a strategy called "The Smith Manoeuvre" http://www.smithman.net/home.html and has written a book on the subject. A blog that has quite a bit of information on this is: http://www.milliondollarjourney.com/the-smith-manoeuvre-a-wealth-strategy-part-1.htm
In a nutshell, you set up two mortgages - home equity line of credit (HELOC) and a regular mortgage. With every mortgage payment you increase the amount in your HELOC by your mortage amount and invest that money in income producing entities. At tax time you deduct the interest paid on your HELOC. You have to be comfortable with leverage as you will not be reducing the amount borrowed until the regular mortage is paid off. There are obviously a lot more details but no sense wasting everyone's time by giving more info.
I have not used the manoeuvre as I am fortunate to not have a mortgage so haven't really studied it. For people that are trying to decide whether to pay down their mortgage as fast as possible, or invest, this is maybe an option.