Refinancing a Property – Should I use IB Margin to Avoid FX Spread?

1

Hello all,

I’m currently refinancing a French property with a Swiss bank. It’s a relatively small amount — €125,000. The bank is proposing a 1.75% FX spread for converting and repaying the existing French mortgage.

However, they’re open to me handling the repayment directly, which would allow me to avoid the FX spread. To do this, I’m considering using a margin loan from my IB account — approximately CHF 116,000 — for one to two months to complete the transaction.

My IB account currently holds around CHF 850,000.

Does this approach seem reasonable? I’d appreciate any advice or tips.

Thanks in advance!
Alan

2

I would do the same as long as your 850k is in a diversified global ETF.

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That 116K is ~13.7% of your 850K. If that capital is invested in diversified global ETFs, as stated above by logitacher, you should be fine.

Just have a plan, estimate the time of the loan appropriately to reduce the risk of having it open.

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Check the margin requirements of your holdings. Some European ETFs, or their tickers on different exchanges, have 100% margin requirement at IB.

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