Hi Guys, i have come across an investment opportunity in property and i am wondering if anyone had use their gold and silver as collateral for a home loan in NSW? I wish someone who had experience can give me some inspiration. I do not want to sell them for cash
Unless you are a private banking client, where they will be prepared to spend time working it out, you probably have little chance. If banks don't sell gold there will be little procedural stuff in place to take custody of your metal by the bank. Please keep us informed of how you go, I'm interested to see what happens.
I would imagine third party issues with this idea. Would the Bank take custody of your metal as insurance? Maybe if you held unallocated there may be a better chance as your dealer would act as the second party and the bank would perform third party audit of your holdings, similar to a share portfolio being offered as collateral.
Plus, I don't think Gold is classed as a tier 1 asset in the Australian financial system as yet? Can anyone confirm? As for silver, forget it I'd say. May as well ask a bank to consider your barrel of copper 1c and 2c coins as collateral for such a thing - I don't think it's recognised at all.
An emphatic no from Commonwealth Bank when the question was put to them in Melbourne for a commercial property deal. Offered a couple of kilos of gold, no dice.
Heres an idea I have been mulling over for a while. Approach the seller and offer your metals as a side payment and get them to reduce the selling price by same amount? You would borrow less and pay less in stamp duty too, your deposit would also become a greater % of the loan, therefore possibly eliminating mortgage insurance?
I believe it . They would have looked at you like an alien wondering why you dont just sell the gold & use it as a deposit .
Sounds good in theory but I am sure it is probably illegal in at least one or two different ways. First you would have to find a seller who recognises the value of gold or silver, including the differences between spot price and premiums. The seller would have to be able to store the metal if they were going to keep it and if they were going to use it to pay off a mortgage they would have to go through the effort of converting it to fiat. And that's before you get to the part which looks a bit tax-evasiony. Sad to say you would probably be better off with two transactions, selling the metal to people who like metal and giving the money to people who like money. You could get lucky though.
It doesn't matter if the price is going down when you get it for nothing. That was the plan all along, conjour money they don't have out of thin air to give as a 'loan' to some poor investor, get the mark to work so they can afford to pay the bank for the money that it never risked in the first place. Trick the fool into using that house as collateral for another 'loan' of money which the bank also doesn't have. Wait until they can no longer afford to pay the bank back any of the imaginary money which is owed. Take all the houses! How to get a house for nothing! I am sure they have another plan to get all the gold but at the moment people are giving away free houses so why not grab them.
I've had that exact conversation with a banker. "Um, because I want to keep the metal." "Yes, but if you sold the gold then..." "...then I wouldn't need to borrow money from you and we wouldn't be having this conversation". The closest solution I can think of would be finding a lender who'd accept shares as collateral and then load up on PMGOLD.
Sounds like a potential business opportunity Take Gold as collateral and lend out ~70% of the metal value or something haha.
How much deposit do you have to have to eliminate mortgage protection? My son will be in the market late next year and he was talking about this recently, how to eliminate mortgage protection costs. Would appreciate an answer from SS members. Thanks hiho for your post! Regards Errol 43
Good creative thinking - apart from the other issues mentioned above, there would be an implied CGT issue for the future - ie if your selling price is lower, you will have automatically incurred a larger potential CGT liability (when it comes time to sell, if that ever happens). Perhaps GP will look after it for you and re-hypothecate?? ... Or JP Morgan ...
I don't want to use silver as collateral, just want to buy a house with 100kg's of the stuff! One day,one day.
Errol, it's 20% of the purchase price usually. So $300 000 property you would have to stump up $60 000 without allowing for all the other fees PS: Its a fucking rort too, you pay for the banks insurance :angry:
Or do what I've done for years - as your portfolio grows, cross-collateralize and that can fly under the need for insurance. Also agree it is a rort - it's insurance for THEM in case you cannot pay/they cannot sell under repossession (or sell too cheaply) - but they'll still hound you for every penny regardless. But since this isn't an RE thread, it's a "how can I use my stack to help finance a property", let's not go there haha.
