Search for the Domjan case - paragraph 42 from memory.
LOC for shares against PPOR
- Thread starter NewYork
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Search for the Domjan case - paragraph 42 from memory.
Volatility is irrelevant, the lenders protect themselves with maximum LVRs before closing positions. Banks lost far more on property loans during the GFC than on shares since they can't quickly close the loan when it approaches a loss.
If I was a bank, and we were in a GFC, I'd rather have mortgage payments coming in every month than shares or margin repayents coming in. The former is more stable and more predictable and keeps coming because houses still exist. Public companies cease to, sometimes.
The GFC was caused by bad property loans, not shares.
Banks can quickly and easily get out of margin loans with no loss. With property they cannot.
Margin loans from a banks perspective are lower risk and the interest rate should reflect this.
Unfortunately it doesn't work that way in Australia and people put up with it.If they were, then they would
But there are better offers from international lenders.
I bet its the same in other countries with margin interest higher than their property interest, for the same reason.
Interactive Brokers charges less than 1.5% in the US on a margin loan, much better than property loans currently available.
I did intend to have it funded to the transaction account where all my rental income and exoenses come out for the inv property. Wouldnt be gard.to track tgat $4k us for loan repayments (expense) and $36k going to my linkednaccount to settle a trade for shares purchase..
I did intend to have it funded to the transaction account where all my rental income and exoenses come out for the inv property. Wouldnt be gard.to track tgat $4k us for loan repayments (expense) and $36k going to my linkednaccount to settle a trade for shares purchase..
In this case it will be mixing borrowed and unborrowed. This is the trouble with borrowing small amounts - it is hard to manage.
At the very least set up a new savings account for these funds, but seek tax advice before doing anything.
