Personal Finance

Is it possible to get a big personal loan for consolidation without liquidating securities?

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  • May 16th, 2018 5:00 pm
[OP]
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Apr 21, 2004
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Is it possible to get a big personal loan for consolidation without liquidating securities?

So we used a couple of low interest rate credit card offers to invest in a few stocks (no, we didn't get burned, thankfully, and they are not alt coin or weed stocks).

We deal mainly with RBC and we have our RRSP's and TFSA's with the bank too. We only have a LOC with TD after we cancelled our chequing account a few years ago.

Is there any way to pledge our TFSA and RRSP holdings so that we don't trade on them and let them serve as collateral if we approach RBC to get a lower interest term loan, that is open and can be completely paid down asap? We don't have cash/margin accounts as we decided to tap into registered accounts for the investments.

I can liquidate a significant portion of our stock holdings (TFSA) and pay down the credit card balances as they come due but I might miss out on more upside on the stocks (FOMO is what people call this).

The reason why I'm concerned is that the low interest rate cards we have, besides the RFD community's favorite MBNA Platinum Plus card, typically carry 11-14% / annum but I think the stocks will be an easy double from the current levels within two to three years. I know there is no sure thing in the stock market but I have this feeling, it may be different for this stock.

We can cover the higher interest charges easily as long as we both our employed (but it's a waste of interest charges that cannot be deducted) but if a consolidation loan can be had for 6-7%, then that sounds more appealing. I don't think any consolidation loan can be had below 6-7% based on my readings of past threads.


I know most of you will advise me to deleverage and I'm open to that but wondering if I should just liquidate and pay down the balances, once the low interest rate offer is about to end.

Thank you.

edit:

I forgot that I had applied for a HELOC in the past over at a CU to make the same investment but my wife did not like the idea so after having gotten approval, I had to call the HELOC off.
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Nov 22, 2015
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alanbrenton wrote:
May 15th, 2018 4:15 pm
So we used a couple of low interest rate credit card offers to invest in a few stocks (no, we didn't get burned, thankfully, and they are not alt coin or weed stocks).

We deal mainly with RBC and we have our RRSP's and TFSA's with the bank too. We only have a LOC with TD after we cancelled our chequing account a few years ago.

Is there any way to pledge our TFSA and RRSP holdings so that we don't trade on them and let them serve as collateral if we approach RBC to get a lower interest term loan, that is open and can be completely paid down asap? We don't have cash/margin accounts as we decided to tap into registered accounts for the investments.

I can liquidate a significant portion of our stock holdings (TFSA) and pay down the credit card balances as they come due but I might miss out on more upside on the stocks (FOMO is what people call this).

The reason why I'm concerned is that the low interest rate cards we have, besides the RFD community's favorite MBNA Platinum Plus card, typically carry 11-14% / annum but I think the stocks will be an easy double from the current levels within two to three years. I know there is no sure thing in the stock market but I have this feeling, it may be different for this stock.

We can cover the higher interest charges easily as long as we both our employed (but it's a waste of interest charges that cannot be deducted) but if a consolidation loan can be had for 6-7%, then that sounds more appealing. I don't think any consolidation loan can be had below 6-7% based on my readings of past threads.


I know most of you will advise me to deleverage and I'm open to that but wondering if I should just liquidate and pay down the balances, once the low interest rate offer is about to end.

Thank you.
It's known as an investment-secured loan or collateral loan. However, the lender will almost certainly require that the collateral funds be invested in either a non-redeemable GIC, or first-party mutual funds. I think HELOC will be a better option for you in this situation..
[OP]
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Apr 21, 2004
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Good point, that's like liquidating my holdings haha so I might as well liquidate them myself and pay down the cards as they come due.

Will have to look into the HELOC option unless I get to roll over some of the BT offers, lol. At least we made good paper profit so maybe my wife will be easier to convince this time around.
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Apr 5, 2016
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HELOC will be the better option as it'll be lower interest rate and easier to get approval.

There is collateral loan but often times they require a significant amount (ballpark guess $200k+). Reason being they need to have an advisor licensed to do this type of loan so it's usually reserved for private banking.
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I've read in financial blog that when an RSP is pledged as collateral, it then becomes taxable.
TEchnically the TFSA can be used as collateral with no penalty. SO far... I've only found one bank that does it. Meridian C.U. There is a bit of loops to jump through... They use another company to do their investment lending, and the TFSA has to be held under Questrade I believe... This is from the info they told me back when I got a LOC with them in 2017.
[OP]
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superfresh89 wrote:
May 15th, 2018 4:21 pm
It's known as an investment-secured loan or collateral loan. However, the lender will almost certainly require that the collateral funds be invested in either a non-redeemable GIC, or first-party mutual funds. I think HELOC will be a better option for you in this situation..
I will see what RBC says. I mean I'm okay with bank using even 50% of the portfolio valuation and/or lowering the credit limit on the secured LOC if the portfolio valuation starts going down.

http://www.rbcroyalbank.com/personal-lo ... redit.html

You could use the equity in your home or your investment portfolio as collateral to secure a higher credit limit at a lower interest rate.

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