Hi I have around 150k worth of stocks that i don't really want to touch, but we are also interested in a house that we are short of downpayment by around 30-40k. Has anyone tried margin lending or any other means for getting a loan temporarily using the stocks ?#stock
You need to keep 6-12 months of mortgage payments as reserve. This can be the reserve. Best for you to talk to a mortgage broker/agent to get advise based on your complete financial picture.
You can also take a second mortgage along with the first, that would cover the 30-40k. It would be higher interest, but you should pay it off quickly.
If you can’t increase your mortgage size, sell the smallest amount of stock you can to make up the difference. Interest on the loan will be high; you are choosing whether to invest that $30k in stock or housing, and there is a penalty to trying to make it do both.
With interest rates this low, why not use a margin loan? 30/150 is a very safe ratio.
Sell your stock. Get a house
Agree with turtleback. 30k on 150k stock is safe’ish. Margin is not for everyone so obviously think about your risk appetite. If you feel comfortable then You can use interactive brokers - rates are quite low - 3-3.1% - which is reasonable and close to mortgage rates.
One thing to consider a mortgage lender will ask "is any portion of the down payment borrowed?" Not sure what happens if you answer "Yes" but it's something to consider. You could take out the loan >2 months ahead of time and lie.
Thanks for pointing this out !
Just for reference - brokerages won’t report to bureau that you have a margin balance. That’s true at least for interactive brokers but my understanding that this is true for all brokerages.
Investment expense interest is not deductible. So if you borrow at say 8%, the stock has to go up that amount plus taxes to break even. With Corona virus and stock market at all time high, that ain't going to happen to very many stocks.
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Margin loans are not a good idea. U r better of selling shares which can drastically go down in value compared to homes. I suggest trying 401k loans as well befor if u don't ont want to sell shares