Using a home loan to purchase stock

Student of Gann · 11 September 2022

Just wondering if I could apply for a home loan then use the proceeds to purchase stock . I know that this is an unconventional approach but I don't own property so I am unable to apply for additional equity . If I was to apply for a home loan I guess the bank would require proof of purchase documents and details to confirm that the funds were being used to purchase property . Also if the bank did find out that the proceeds were used to purchase stock instead of property what action would they take in that regard . Applying for a personal loan to obtain funding would defeat the purpose as the interest rates are too high so I am investigating any other means to acquire funds , any ideas appreciated

Value Collector · 11 September 2022

Student of Gann said:
Just wondering if I could apply for a home loan then use the proceeds to purchase stock . I know that this is an unconventional approach but I don't own property so I am unable to apply for additional equity . If I was to apply for a home loan I guess the bank would require proof of purchase documents and details to confirm that the funds were being used to purchase property . Also if the bank did find out that the proceeds were used to purchase stock instead of property what action would they take in that regard . Applying for a personal loan to obtain funding would defeat the purpose as the interest rates are too high so I am investigating any other means to acquire funds , any ideas appreciated

The Bank will be wanting to use the property you purchase as security for the loan, if you don’t own a property to use as security you can’t get the home loan.

—————————-

The interest rate you pay is largely determined by the risk you are asking the bank to take, if you provide a piece of real estate as security for the loan and have put in a 20% deposit as a buffer, the bank has low risk, so you get a low interest rate.

If you want to borrow without putting up any security except your personal guarantee (eg a personal loan), you will pay a high interest.

You can buy shares and use the shares as security for a loan, that’s called a margin loan, it will have less interest than a personal loan, but more interest than a real estate backed loan.

If you already own some real estate you can use that that collateral for an investment loan, and use the proceeds to by shares, and you will pay interest similar to a home loan.

Telamelo · 11 September 2022

Student of Gann said:
Just wondering if I could apply for a home loan then use the proceeds to purchase stock . I know that this is an unconventional approach but I don't own property so I am unable to apply for additional equity . If I was to apply for a home loan I guess the bank would require proof of purchase documents and details to confirm that the funds were being used to purchase property . Also if the bank did find out that the proceeds were used to purchase stock instead of property what action would they take in that regard . Applying for a personal loan to obtain funding would defeat the purpose as the interest rates are too high so I am investigating any other means to acquire funds , any ideas appreciated

Consider a loan from an Arab bank lol (as believe they don't charge interest!?)... an ex girlfriend of mine in finance from a few decade's ago once told me some Arab's would have interest waived on their loan products (based on their religious beliefs & entitlements). Perhaps a viable option to consider/investigate...

qldfrog · 11 September 2022

Telamelo said:
Consider a loan from an Arab bank lol (as believe they don't charge interest!?)... an ex girlfriend of mine in finance from a few decade's ago once told me some Arab's would have interest waived on their loan products (based on their religious beliefs & entitlements). Perhaps a viable option to consider/investigate...

You would need to convert....

qldfrog · 11 September 2022

About HL to buy shares
Not viable, the loan is never sent to you.the bank sends the money to the seller during settlement and puts the mortgage in place.
There is no way you would get a cent this way.
But you can purchase a property,and then redraw from the loan.
that obviously defies the purpose
You can get a personal loan and pay horrifying rate for that freedom..but unless you have insider trading ?, that is highly risky

Telamelo · 11 September 2022

qldfrog said:
About HL to buy shares
Not viable, the loan is never sent to you.the bank sends the money to the seller during settlement and puts the mortgage in place.
There is no way you would get a cent this way.
But you can purchase a property,and then redraw from the loan.
that obviously defies the purpose
You can get a personal loan and pay horrifying rate for that freedom..but unless you have insider trading ?, that is highly risky

Back in the 70's/80's easier just to go rob a bank lol haha

qldfrog · 11 September 2022

Telamelo said:
Back in the 70's/80's easier just to go rob a bank lol haha

You can do the same now, just be called a spammer or hacker.
It helps if you're a Nigerian prince or the lawyer of an oil minister.....?

Value Collector · 11 September 2022

Telamelo said:
Consider a loan from an Arab bank lol (as believe they don't charge interest!?)... an ex girlfriend of mine in finance from a few decade's ago once told me some Arab's would have interest waived on their loan products (based on their religious beliefs & entitlements). Perhaps a viable option to consider/investigate...

Arab banks still charge fees, they just don’t charge “interest”, so it works out the same.

Both the Bible and the muslims Qu’ran forbid lending money at interest, it’s just the modern Christian’s ignore that part, and the jews choose to interpret it differently. (Just like the Bible forbids eating bacon, but Christian’s ignore it but muslims don’t ignore it).

——————————

So the way Arab loans work is that rather than lending you $100k and charging you 5% interest meaning you pay back $120k.

The Arab banks will buy the house from the seller for $100k and then sell it to you for $120k, and allow you to pay that $120k back to them over time interest free.

So technically there is zero interest, but you are paying them the same equivalent profit over time, it’s just not “interest”.

Garpal Gumnut · 11 September 2022

Student of Gann said:
Just wondering if I could apply for a home loan then use the proceeds to purchase stock . I know that this is an unconventional approach but I don't own property so I am unable to apply for additional equity . If I was to apply for a home loan I guess the bank would require proof of purchase documents and details to confirm that the funds were being used to purchase property . Also if the bank did find out that the proceeds were used to purchase stock instead of property what action would they take in that regard . Applying for a personal loan to obtain funding would defeat the purpose as the interest rates are too high so I am investigating any other means to acquire funds , any ideas appreciated

That would be impossible SoG.

Getting a license to be a Financial Adviser is the only way to make interest free money.

But it would be a Faustian bargain.

gg

StockyGuy · 11 September 2022

By God, you'd wanna be very sure your trading style/methodologies are rock solid before trying to use ANY OPM at retail rates.

tech/a · 11 September 2022

oh my

InsvestoBoy · 11 September 2022

Student of Gann said:
Applying for a personal loan to obtain funding would defeat the purpose as the interest rates are too high

Buddy personal loan rates are like 7%. If that rate is too high relative to your prospective returns, are you sure you're in a position to be levering up at any funding rate?

investtrader · 11 September 2022

Ha Ha ha ... when the fraud squad come after you , they can find use your post as evidence.

KevinBB · 11 September 2022

Student of Gann said:
Just wondering if I could apply for a home loan then use the proceeds to purchase stock . I know that this is an unconventional approach but I don't own property so I am unable to apply for additional equity . If I was to apply for a home loan I guess the bank would require proof of purchase documents and details to confirm that the funds were being used to purchase property . Also if the bank did find out that the proceeds were used to purchase stock instead of property what action would they take in that regard . Applying for a personal loan to obtain funding would defeat the purpose as the interest rates are too high so I am investigating any other means to acquire funds , any ideas appreciated

Don't be daft or greedy. Stick with your day job, and use the funds you have available for investment.

If your investment approach works, then you will soon have an increased account size to play with.

If your investment approach doesn't work, then you will still have a shirt on your back.

KH

rcw1 · 11 September 2022

Good evening
rcw1 only uses a bank loan to trade on the Stock Market.
Have done so for about 3 to 4 years. Interest rate today is 4.74% with BankWest. Was originally with CBA who owns BankWest, funny really the games Banks play... anyways that's another story.

Not sure how the conversation come about, but on Commsec Community, Keys mentioned it as Keys used a bank loan to trade/invest in the stock market. Had a chat on line about it, investigated further and got a Broker who had done allot of work in the past to put it together for rcw1.

Haven't missed a beat. Obviously not for everybody, but works for rcw1.

As a matter of interest, if anyone has heard from a Keys, appreciate if you would let rcw1 know.

Have a very nice week.

Kind regards
rcw1

rcw1 · 11 September 2022

Eskys are you keys??
kind regards
rcw1

frugal.rock · 11 September 2022

To have this pre-approved sitting on the side ready to deploy in acrash, would be an equity builder... Otherwise, like anything, one would want to run their numbers pproperly, consider taxation etc

NAB Equity Builder

That other thread where @Student of Gann is asking if they can use their home loan to buy stocks had me looking around the internet to see what the cheapest personal loan rate is. I discovered this interesting product from NAB...

www.aussiestockforums.com

MovingAverage · 15 November 2022

Nope.

But you can buy a house with the loan wait a few years for the house to increase in price (which is difficult at the moment) then take out a line of credit against the equity in the property. Interest on the LoC will be deductible against income etc (divs). Better than a margin loan because they'll be no margin call on the LoC. LoC will be secured against the property and margin loan will not.

DYOR

divs4ever · 15 November 2022

Telamelo said:
Back in the 70's/80's easier just to go rob a bank lol haha

was hard enough to escape your bank robbing you first ( ever wondered why i am extremely underweight on the BIG 4 )

divs4ever · 15 November 2022

rcw1 said:
Good evening
rcw1 only uses a bank loan to trade on the Stock Market.
Have done so for about 3 to 4 years. Interest rate today is 4.74% with BankWest. Was originally with CBA who owns BankWest, funny really the games Banks play... anyways that's another story.

Not sure how the conversation come about, but on Commsec Community, Keys mentioned it as Keys used a bank loan to trade/invest in the stock market. Had a chat on line about it, investigated further and got a Broker who had done allot of work in the past to put it together for rcw1.

Haven't missed a beat. Obviously not for everybody, but works for rcw1.

As a matter of interest, if anyone has heard from a Keys, appreciate if you would let rcw1 know.

Have a very nice week.

Kind regards
rcw1

( relative ) certainty of income is important with this stuff . i personally would hate to be under pressure trying to generate trading profits to service the loan ,.... but it you were a big earner with a decent income that might work for you

Using a home loan to purchase stock

Student of Gann

Value Collector

Have courage, and be kind.

Telamelo

qldfrog

qldfrog

Telamelo

qldfrog

Value Collector

Have courage, and be kind.

Garpal Gumnut

Ross Island Hotel

StockyGuy

tech/a

No Ordinary Duck

InsvestoBoy

investtrader

KevinBB

rcw1

rcw1

frugal.rock

NAB Equity Builder

MovingAverage

Just a retail hack

divs4ever

divs4ever

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