Borrow money using gold

Bfd_lad

Hi I want to try and borrow some money against the gold I hold (which is quite a large amount).

The money needs to be on a low interest rate as I'm basically wanted to use this i'n my offset mortgae account

Any ideas

paddyrg

Owning the gold, then borrowing against it, then putting that borrowed interest against a mortgage - you may find the interest gap (indeed the "hysteresis"!) in the system makes this more expensive than just selling the gold to early repay the mortgage? Other than that, I'm guessing you would need to put the gold physically into the hands of whoever you were borrowing from in order to secure a low-rate loan??

Bfd_lad

Hi thanks for reply, actually I have a mortgage for 60k and I can get an offset mortgage, if I put anything into my savings account this reduces the interest I have to pay, but all my savings are i'n gold which has a current value of about 50k (resale value is lower about 40-45) I just want to know if there's anyway of converting my gold asset to money without selling it as I would lose some money by selling gold, if I could do this and borrow at a low interest rate i would not pay any interest on my mortgage and any payments I made would go directly to payingthis off, long shot I know and not sure even possible

jonesMUFCforever

What is this gold then - bullion - ingots or bling!!

paddyrg

Yep, I can see your reasoning, but I'm just unsure how you could secure a loan against the gold without literally holding it. And even then, I would imagine you would only be able to borrow against part of its value as the price fluctuates, and whilst it is currently high it is entirely possible it'll dip. Where is the gold at the moment? Perhaps whoever is physically holding it can loan against it?

redpete

I think there's a contradiction here. You must think that gold is a sure enough investment that you have put all your savings eggs into the one gold basket, so no consideration of spreading risk across different asset types. If you are so sure it will produce a good return then why not get an interest only mortgage and sell enough gold to pay it off at the end of the term.

But then by wanting to effectively overpay the mortgage you are saying that you do want to spread some risks by investing into the equivalent of cash (or arguably property). If this is true then you will have to accept some dealing costs to get from gold to cash.

Someone has to carry the risk of your gold losing value, a pawnbroker would do this by offering you an amount in a loan that might be lower than you get by selling it elsewhere and by charging interest on the loan. It seems you want someone to carry this risk for you but not charge you anything for doing so - unlikely.