Re:Musk announces funding secured for Twitter buy
by kjksf on Thursday April 21, 2022 @01:14PM
(#31112268)
Margin loan against your stock is more like a line of credit.
Once you upgrade your brokerage account to include margin loans you're allowed to borrow up to, say, 40% of the value of your stock (I simplify, the exact rate is dynamic).
Say you have $1 million in stock.
You're allowed to borrow up to $400k. You have a line of credit of $400k.
Say you borrow $100k. And in this context "borrowing" is simply transferring money from your brokerage account to your bank account. There's no additional paperwork as in most loans.
Let's say over 5 years you accumulate $10k interest (interest rates are really low, can be below 2% right now).
You don't have to "repay" that $10k or the principal. You now owe $110k which is well below $400k limit.
It's a line of credit, you can still borrow additional $290k.
In the limit that line of credit would only have to be settled when you die.
Once you upgrade your brokerage account to include margin loans you're allowed to borrow up to, say, 40% of the value of your stock (I simplify, the exact rate is dynamic).
Say you have $1 million in stock.
You're allowed to borrow up to $400k. You have a line of credit of $400k.
Say you borrow $100k. And in this context "borrowing" is simply transferring money from your brokerage account to your bank account. There's no additional paperwork as in most loans.
Let's say over 5 years you accumulate $10k interest (interest rates are really low, can be below 2% right now).
You don't have to "repay" that $10k or the principal. You now owe $110k which is well below $400k limit.
It's a line of credit, you can still borrow additional $290k.
In the limit that line of credit would only have to be settled when you die.