No, it’s not the same. For delayed payments of utility bills etc one pays typically 5% penalty interest, while delaying the tax payment is kind of acceptable.
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You are probably right that the bank will assess it like that, and arguing about the differences between a brick & mortar bank loan and a margin trading account might well be pointless. It also seems easy to lead to ad absurdum though: How would you assess a day trader, that each day goes to up to 1:3 leverage but closes the day with 0 loan? As far as IB is concerned this is all fine and within the same agreement you sign up to with a margin account. But for the mortgage provider?? 
N.B.: I’m not proposing to hide anything in your mortgage application, that is not my point.
The bank says I can increase the mortgage on my main residence and use the money as downpayment for the new property. I fail to see why this is any different from borrowing against the stocks, but I guess it might have something to do with the additional interests going to the same bank and not IB 
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There is no hard guarantee for that. While IB will obviously do their best to set margin requirements such that you’re always net-positive, it’s theoretically possible that the margin requirements aren’t strict enough and your account becomes net-negative, in which case you would have to deposit more cash to pay back the loan. Very unlikely when investing in broad market funds but possible when investing in individual companies (which may go bankrupt).
One of my best friend is a mortgage broker and actually margin loan is pretty common for financing primary residence (house/appartment) when it comes to wealthy people. Usually banks are willing to finance such client as they have a great earning power and because they earn interests on both sides, on the margin loan and on the mortgage.
Regulatory wise, there is nothing illegal. You are just extracting some cash out your investments and banks are pretty fine with it.
However, it does mean that you are increasing the riskiness of your overall asset allocation and this should be considered wisely.
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I got confused. How will IB allow you to withdraw the margin loan? I thought you can only borrow money to buy stocks (or other instruments). I don’t think you can borrow money to withdrawal. Please please correct me if I am wrong.
If you have a margin account you can just create a new withdrawal order and if you withdraw more cash than you have in your account then your cash balance will just turn negative and you pay interest on that.
A quick Google search seems to prove you wrong 
Although apparently you can’t withdraw on margin if you’re served by IBKR‘s European Union entities.
Thanks for the reply. Alright, true that I can withdrawal cash and result in negative cash balance. But to my understanding, it is because I have put more cash than needed to purchase the stocks.
For example, assuming amzn price per share is $100. I put in $10k and buy 100 shares. Now I can withdrawal $5K and end up with cash balance negative $5k. This is equivalent as I put in $5k and buy 100 shares of AMZN. IB borrows me $5k to buy 50 shares.
In my understanding, you can use less cash to purchase stocks with IB and use those “put aside” cash anywhere you want, not even deposit in IB in the first place. But you will never end up with more cash from IB. So again, IB only borrows you money to buy stocks, but will not borrow you money to buy houses.
IBKR lends me money against the stocks, then I can do what I please with the cash.
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There are margin requirements which state exactly how much you can leverage yourself for example 1:4 or 1:2 or else you will get margin called.
This is written a little bit confusing to me but I will try to understand. Basically you want as much money “working” for you in stocks so there is no sense in investing only part of it and then over-leverage using margin when you can just deposit all your money, invest in stocks and then get a margin loan with the stocks as collateral. The more stocks you have the more collatoral and thus the more margin you can withdraw. If you only invest part of the money you will subsequently also not be able to withdraw the same money as you don’t have the same collatoral value.
Of course you can. IB does not offer mortages but you can withdraw a margin loan for a downpayment for example.
They do for sure, you can do whatever you want with the loaned money.
E.g. I deposited around 100k in total and invested everything leaving me with a cash balance of 0. Then I withdrew 5k to pay part of my taxes (just wanted to get a feeling for margin loans with IB) and I didn’t sell any of my investments. Leaving me with 100k invested and -5k cash balance.
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I think that there are many misconceptions with margin here. In IBKR, you can withdraw cash without any issue, the amount you can usually whithdraw (or use to buy more stocks) is around 50% of the cash that you have deposited (that is my case, correct me if I am wrong as general rule for Reg T).
I think that withdrawing 50% of your total assets (the max leverage) is way too risky: if stocks/ETFs goes down you will be in debt and IBKR will close some of your positions, not very convinient.
Starting from September I was planning to do some leverage and take a % of margin to re-invest / use it to buy a rental property abroad. It will look something like this:
If I have 100K invested, I have 50K margin available and I will always use 12.5k or less so less than 25% of the available margin (so 13% of my total amount invested). This will mean that the market need to drop more than 50% for IBKR start closing my positions.
My idea was to use a portion of margin for re-investing in ETFs and when I will have enough take the remaining (up to 25% of available margin) to buy a rental property, without having to put cash aside for this as I prefer to be as much invested as I can.
Do this make sense for you?
I had the same reasoning.
Yes, absolutely, except that you have to have a very big portfolio to be able to finance own contribution with a margin loan. And there is a thread discussing this and there was no conclusion if it is allowed.
Yes, you are right. Thank you for your reply.
Another consideration, having let’s say 250K invested, you have a maximum of 125K available margin.
To my previous post I would add that in case of a rental property, for the short term I would allow myself to retrieve more than 25% of margin if I know I can reduce my debt to my safe margin rate quite rapidly. I would take a max of 50-60% of margin (75K), which is enough for a house abroad.
As you say, not sure if IBKR allow to withdraw that much at once (would we need to do it in several months or just ask before to IBKR?), neither whether a bank will allow that the money from a morgage comes from margin.
On the internet we can find examples of people that have done it but they are not necesarely from Europe, we don’t know whether everything was declared etc etc …a lot of questions.
Interesting topic!
I’ve been visiting UBS a few months ago for financing our main residence that we finally didn’t buy.
They offer me to pledge equity for 3/4 of the down payment so 15% of the property value. It was part of the regular hypothek (0.8% +SARON) unegociated
Of course offer fees by ubs are huge : 0.4% custody fees
Depending on your portfolio and the project it’s a per case estimate they take 50 to 90% value of your equities.
For large ETF the banker told me it should be around 60%.
I guess it’s really important to read between the lines as conditions may change… but at a first glance it seems safer than borrowing with IB!
I may do this kind of operation in the future once I’ll found our dreamed chalet at a reasonable price.
I guess you are talking about pledging equities you hold in the bank that will provides you with the mortgage, is that right?
In that case, you can transfer equities from IBKR to UBS (or the bank that will give those conditions) and use 50% of equities as collateral for the downpayment?
That doesn’t sound so bad… The pity are the custody fees & the obligations to keep the equities in that bank.
Could you elaborate why you think UBS is safer? I assume because at UBS there might be a discussion with your personal banker the margin call is executed (?)
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I guess you are talking about pledging equities you hold in the bank that will provides you with the mortgage, is that right?
Yes that’s exactly that
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Could you elaborate why you think UBS is safer? I assume because at UBS there might be a discussion with your personal banker the margin call is executed (?)
Yes he is supposed to give you a call before your positions are liquidated and in case of problem UBS is under swiss law… anyway it’s just a feeling.
Anyway I’ve seen a guy from VZ today. Custody fee 0.1% per year and Lombard loans available @0.8 + SARON. They only count 30% of your equities and they start to worry about -25% on your portfolio. No ads or conditions on internet they do offer this service to private clients when they ask
I think I will transfer my swiss ETF by them and will try the platform and get more details about this lombard loan. I had some precise fiscal questions and the guy was really competent, I won’t stop with IB for VT and DCA with their amazing recurring investments but I’ll feel better to have some equities on a physical swiss bank
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Last year I did withdraw 250k in one shot without any issues (from IB, at least… the query came from the receiving bank account…) 
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