(Very short) term loan

spock007

My broker isn't allowing bed & isa. 
Plan: get a £20k loan. 
Put £20k into S&S ISA on April 6th. 
Sell £20k in trading account on April 6th. 
Pay off loan on April 6th. 

I'm doing this so cash isn't sitting in clearing for a couple days between selling in trading account and going into S&S ISA. 
--> Any downsides to this? I don't think there's any sort of fixed fee - I can't see how I can be charged much interest at all if I pay it off same-day?

FYI I've never had a loan before and think I'm being naive here - surely a settlement fee will be involved for early settlement. Must be a better way...

[Deleted User]

Getting a 20k loan will largely depend on your income and other debt - unsecured lending is rarely going to be that high

Ebe_Scrooge

spock007 said:

My broker isn't allowing bed & isa. No idea what this means?
Plan: get a £20k loan. 
Put £20k into S&S ISA on April 6th. 
Sell £20k in trading account on April 6th. 
Pay off loan on April 6th. 

I'm doing this so cash isn't sitting in clearing for a couple days between selling in trading account and going into S&S ISA. 
--> Any downsides to this? I don't think there's any sort of fixed fee - I can't see how I can be charged much interest at all if I pay it off same-day? You can be charged a fee for early settlement of a loan, up to 2 months' worth of interest
Must be a better way...  Maybe I'm not fully understanding ... but would it not be a whole lot simpler to sell your £20k a week or so earlier, giving it time to clear, then bung it straight into the ISA?  Can't see what advantage you'd gain by faffing around with a loan - even if you're accepted for one.

I'm sure I must be missing something, but my comments - for what they're worth - above

Stenwold

spock007 said:

My broker isn't allowing bed & isa. 
Plan: get a £20k loan. 
Put £20k into S&S ISA on April 6th. 
Sell £20k in trading account on April 6th. 
Pay off loan on April 6th. 

I'm doing this so cash isn't sitting in clearing for a couple days between selling in trading account and going into S&S ISA. 
--> Any downsides to this? I don't think there's any sort of fixed fee - I can't see how I can be charged much interest at all if I pay it off same-day?

FYI I've never had a loan before and think I'm being naive here - surely a settlement fee will be involved for early settlement. Must be a better way...

I might be missing something, but what's wrong with having the cash fluid for a couple of days until it's reinvested? Surely you're not considering faffing about with a personal loan to avoid a couple of days of low interest?

jjdc

Are you invested in a certain couple of biotec stocks expecting a large govt contract starting 7th April by any chance? If so the loan is probably your best bet if bed and ISA not possible and you don't want to risk being out before then. If you sell shares on 6th you won't be able to cash out as you'll need to wait for funds to clear for withdrawal, typically 2 days - you can still invest in other markets as that's the way it works. You'll still be in the 14 day cooling off period though assuming you wait nearer the time.