Hi folks,
I’m considering buying house with a budget of 2M. With the new law that may come into account from 2028 where we cannot deduce mortgage interests (and renovations), I was thinking it could be worth it to take a Lombard loan (considered as a “private” debt). I currently have 2M on IBKR.
Did any of you make the computation? What are the trade-offs according to you?
Under the new law, you cannot deduct interest or debt from any loan, including margin loans. In order to be able to make deductions in the future, you would have to transfer the real estate and portfolio to a company. Unless you take out a margin loan of around 45 million from IBKR, the interest rate will be higher than that of a mortgage. IBKR can call the loan back at any time.
The main danger is duration mismatch.
You could make a 400k downpayment with lombard and a 1600k mortgage if you plan to keep on DCA on your portfolio. Anyway don’t take that decision lightly
I think that’s a more theoretical aspect. From my understanding, a back could also theoretically call back a mortgage at any time.
But I agree with all the rest. The collateral for a mortgage is the house. The collateral for a lombard loan are the securities. So it makes much more sense to use the house as collateral, since it’s directly tied to the loan. The securities are not directly tied to the purpose of the loan (i.e. the house).
Thank you all for your answers!
After consideration, it seems very risky to use Lombard for a mortgage AND not profitable if those cannot be deduced from taxes etc. 400k as a Lombard loan may be an option but since the money is there (cash + pillars), I don’t think the risk is worth it (yes technically if you have a RoI of 6-7% and interest rate of 2.5-3%, you still earn but at what risk).
Thank you all for your thoughts!