Leverage for shares

Discussion in 'Sharemarket Investing Platforms, Tools & Services' started by Silverson, 4th Sep, 2018.

Join Australia's most dynamic and respected property investment community
  1. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    406
    Location:
    Melbourne
    Hello fellow investors and pc'ers I trust everyone is well.

    I'm looking for opinions/experiences from others in the know or others who have been in this position.
    Mortgage(s) 100% offset and looking to leverage into stocks. Margin loans are fantastic, however is there any way other than using money from offsets to obtain finance at a rate in the low 4% at current?
    I know a LOC is an option however the rates for this are quite high in comparison.
    I'm pretty much asking what is the best way/is there a way/product to borrow additional funds whilst leaving money in offsets at a rate similar to borrowing for property?

    I know it's simple enough to use the money from offsets (technically using my money), however I would love to have cash available if, and it's a big if, there is a serious downturn where lending gets even tighter etc and opportunities present.

    Thanks in advance.
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,521
    Location:
    Canberra, Brisbane and Sunshine Coast
    Apply for an investment loan against a property - use is for "future investment in shares"

    Cheers

    Jamie
     
    Silverson and Terry_w like this.
  3. Mcube

    Mcube Well-Known Member

    Joined:
    11th May, 2017
    Posts:
    167
    Location:
    Canberra
    Will the intertest rate be the same as the PPOR home loan rate if the purpose is furure investments in shares? Thank you.
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,521
    Location:
    Canberra, Brisbane and Sunshine Coast
    Should be investment rate

    Cheers

    Jamie
     
  5. Mcube

    Mcube Well-Known Member

    Joined:
    11th May, 2017
    Posts:
    167
    Location:
    Canberra
    Thanks Jamie. That means no 3.7% plus with CBA for shares investment. The investment rate for P&I 2 years fixed is 3.99% or will it be higher than that?
     
  6. Pleep

    Pleep Well-Known Member

    Joined:
    6th May, 2018
    Posts:
    136
    Location:
    NSW
    I’m no expert, but I suggest you shop around and put the squeeze on your current financier. If I understand correctly you have zero net loan position at present, so perhaps they can split your loan to a portion for investment purposes but you’ll have to argue hard on the rate. Investment rates are higher but they do have room to move if they value you or if they have screwed You round somehow - probably more so on smaller banks/institutions. A smaller institution may value you more if you move to them.
    Don’t forget to sell yourself i.e. let them think you’ll be a big borrower in future.
    Also note that P&I is not ideal but it can get your rate down, and you could request ‘top up’ to the investment loan each year to bring it back to full value if they remain happy to.
     
    L3ha7 and Mcube like this.
  7. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    406
    Location:
    Melbourne
    Went and spoke to my bank, got an additional 200k and a reduced interest rate, also got made to feel like I'm the stupidest person on two feet wanting to buy shares cause they are so risky and property is the way to go.
    Thanks @Jamie Moore
     
  8. SatayKing

    SatayKing Well-Known Member

    Joined:
    20th Sep, 2017
    Posts:
    2,118
    Location:
    Australia
    Bloody heretics. They're everywhere.
     
  9. Blueskies

    Blueskies Well-Known Member

    Joined:
    24th Aug, 2015
    Posts:
    841
    Location:
    Brisbane
    Unless you buy using the banks high fee actively managed product, then you are a genius. :rolleyes:
     
    Silverson and Gestalt like this.
  10. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    406
    Location:
    Melbourne
    Tune quickly changed when I said to her if my shares are worth nothing you will be in more trouble then me as I'm buying more of the bank you work for, I'll be down a company out of however many I hold, you on the other hand will be out of a job.
     
  11. L3ha7

    L3ha7 Well-Known Member

    Joined:
    24th Apr, 2016
    Posts:
    857
    Location:
    Syd
    So that will be tax deductable?
     
  12. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,521
    Location:
    Canberra, Brisbane and Sunshine Coast
    Given the “purpose” I’d assume yes.... But I’m not an accountant - so seek pro advice
     
  13. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    7,293
    Location:
    .
    Awesome response:).
     
    Redwing likes this.
  14. KinG3o0o

    KinG3o0o Well-Known Member

    Joined:
    17th Jul, 2017
    Posts:
    786
    Location:
    Sydney
    hmm borrowing money to buy someting in the downturn (dont get me wrong, its the right thing to do),but you are using the market to help you make decision and not using your own analyst to help you make that decision.

    are you sure thats the right thing to do ?

    are you sure you can afford the repayments if the "entry" price is wrong..

    you dont know where the bottom is until its the bottom.

    as long as you can HODL, 4% is a good rate.. much better than margin loan.. but be sure you also know your exit price.. this is not CASH where you can pretty much hold until you go green, every month you are bleeding cash if you are below that 4%.


    just go watch the short sellers, they are doing the opposite but the same idea..
     
  15. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    3,752
    Location:
    ..Sunny Brisbane...
    Problem is they would know a long time before any shares holders ect through their intricate webs of casual links that the company was going belly-up..
     
    Silverson likes this.
  16. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    406
    Location:
    Melbourne
    I'm a super lazy investor, I don't have an exit price as I don't sell, I will not buy an asset if I'm not whiling to hold it forever. I have never to date sold a single stock and don't plan to.
    In terms of being able to hold I will not be using more then 30% lvr and currently am 100% offset across existing loans, the reason for the top up is simply due to me wanting to borrow as much as I possibly can, just in case lending gets even tighter or my circumstances change. It's better to have and not need as apposed to need and not have.
    Trying to pick top or bottom is crazy talk, I'd much rather just keep buying consistent amounts as frequently as possible.
     
    sharon, Parkzilla, Stoffo and 2 others like this.
  17. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    406
    Location:
    Melbourne
    Even if they would know a long time before any holders it again would mean that one company out of how many I own has turned to crap, theoretically the clients this company had would then siphon onto other financial institutions of which I hold a position in, hence in theory increasing their profits/dividend, lose/win
     
  18. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    406
    Location:
    Melbourne
    The only response that I saw fit at the time! I must admit, your posts, posts from @SatayKing and afew others have changed the way I look at the sharemarket, makes me take a far simpler view (not simple enough to be 100% LIC though, sorry to disappoint haha) so I tilt my hat to you.
     
    Redwing, sharon, lamecrocs and 2 others like this.