Can one use a margin loan on securities from IBKR to fund GV?

[noahhavoc]

Can one use a margin loan on securities from IBKR (in the US) to fund the portugal GV? Any gotchas in the process? How do I show proof of funds from a wire from IBKR to a portugese bank account?

[jb4422 (Jeff B)]

Securities-backed loans from Swiss banks at low rates (valid for the Portuguese Golden Visa program)

Great tip, @guifig! I’m sure this can come in handy for many If just like to add that Interactive Brokers has a similar offering open to both US and non-US residents. Since many already invest with them and their fees are incredibly low you should check if they can offer you what you need. I don’t recall the specifics, but I believe you may not be able to take out as big of a loan (as a % of assets) as you could with the banks Gui mentioned.

Collateral Loans for US Based Investors

Two additional options along these lines: For borrowing the funds on margin, Interactive Brokers has the best rates that I’ve seen. They are benchmark rate plus 1%, currently that is 1.08%. You pay BM+1.25% on the first $100k, so a $400k loan would be a mixed rate of ~1.2%. That is a variable rate, so some potential risk if rates go up. For the HELOC option, for those in the NE US, check out PNC Bank. They have a “Choice HELOC” which has a variable rate (currently ~3%) but you can also choose …

[john.mcnertney]

Great options mentioned here. All these asset based loans are essentially a mortgage, or a HELOC against your brokerage accounts and they work well. You may want to check out some other ways to pledge your brokerage assets. Charles Schwab has their own internal option, TD Ameritrade can partner with third party lendors, and a few of the others have some interesting options. Nice thing is that these aren’t a margin loan and won’t force you sell or use up all your available cash balance.

[B2D2]

I used this in part to fund my investments. Also was able to transfer via IBKR directly using SEPA (Euro direct interbank transfer-cheaper than a wire), and the Bank was able to confirm proof of funds.

A few things to be aware of:

1. It’s variable so the borrowing rates will rise if rates rise. (Conveniently I’m planning to pay off my loan next month right before when rates are expected to rise. )
2. Don’t overleverage and get too close to the maximum borrowings to avoid automatic liquidations (IB doesn’t have margin calls) if there are market swings.
3. Send any ACH transfers via a push from your bank (IB has info on the site), not a pull from IB, as there is a far shorter waiting period this way.
4. I recall reading something about a 30 day waiting period after brokerage assets are transferred in before they’re available for withdrawal, though from what I recall didn’t experience this myself and not sure under what conditions this would apply.

[noahhavoc]

Thanks for the helpful resources!

@B2D2 Could you provide a bit more detail on how exactly you did that in IBKR US? So there is an option to “withdraw” from the IBKR margin account UI. Did you choose the “Euro” option and then provide the SEPA number of the portugese bank? If you did that, at what exchange rate did the transaction go with?

Ideally, I would like to “withdraw” using margin and deposit the USD amount into IBKR itself. Then convert that USD to Euro using a limit order. And then transfer it using SEPA. Is this possible?

Don’t overleverage and get too close to the maximum borrowings to avoid automatic liquidations (IB doesn’t have margin calls) if there are market swings.

What do you recommend? I know regT is 50%, I was wondering if 20% makes sense. The assets are mostly Vanguard style total market funds.

Send any ACH transfers via a push from your bank (IB has info on the site), not a pull from IB, as there is a far shorter waiting period this way.

How do you do this? Does this mean you “withdrew” the USD from the margin account to some other IBKR account and then did a ACH pull from your Portugese bank to the US bank?

Thanks!

[B2D2]

1. I converted dollars I didn’t have to Euros creating a negative dollar balance and a positive Euro balance using a limit order. Then I withdrew the positive Euro balance via SEPA (choose withdrawal->Euros) to my Portuguese Bank, leading me to have a negative overall cash balance remaining. Alternatively, I think you can withdraw Euros creating a negative Euro balance, then convert dollars to Euros using a limit order. In theory you could have a negative balance in either dollars or Euros.

2. A margin loan of 20% of value seems conservative enough to me (though each person has their own level of tolerance). I went as I high as 1/3.

3. This is if you have cash at a US bank that you want to bring into your IBKR account to convert at IBKR and then transfer via SEPA. This doesn’t apply if you’re only using a margin loan. I used a combination of both.

To do this:
Click on Transfer and Pay->Transfer Funds->Make a Deposit .
Choose “Direct ACH Transfer from your Bank” and click on instructions to get info.