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Discussion Starter #1
Let me describe the situation that both and I a friend are in and are looking to get an investment interest only loan to allow us to withdrawal our dividends in the future.

We have a re-advancable HELOC and have been using that as an investment loan to buy dividend paying stocks. At the same time, we have both been using the margin offered from our discount broker to basically double the amount of leverage we were using.

So at any point, we have X borrowed from the Interest only HELOC and X borrowed in the form of margin. This has served us very well over the past year or so. Except now we would like to start taking the dividends received from the broker account and use to pay off the interest on HELOC so that we do not need to use our other cash flow for it.

The issue is that because of the margin the broker won't let us withdraw the dividends received. Selling the stock to remove the margin isn't a good option because of the large capital gains hit.

So now to the question, where can we get a loan that is secured against the investments so that we can withdraw the dividends to pay the interest on both the HELOC and the investment loan, plus have the rest to pay the extra income tax.
 

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Have you tried calling the broker and asking if you can withdraw the dividend income? I don't see why you shouldn't be able to, if you are meeting maintenance requirements on the margin.
 

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Have you tried calling the broker and asking if you can withdraw the dividend income? I don't see why you shouldn't be able to, if you are meeting maintenance requirements on the margin.
I have asked and they stated that I have a negative cash balance, so I can't withdraw any cash?

Does anyone know of a broker that does let you withdraw dividends even when trading on margin? That would also solve my problem.
 

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sounds like what people are doing with real estate...

i have no advice since this is way too aggressive for my taste. i will be retiring early and can't afford to take the risks.
 

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You didn't mention who you use. Interactive Brokers offers very low margin rates, but has somewhat high account minimums and has a pretty obtuse interface. It's designed for use by professionals. If you don't find it too intimidating, they are a good option. Of course, you'll need to ask them whether they allow you to withdraw funds while using margin.
 

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I have a margin loan with TD Waterhouse. Once the margin loan interest is covered I take the rest of my dividends out. No restriction on my ability to access cash as long as the loan is fully secured which it is. Sounds like your broker isn't very accommodating.
 

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As someone else mentioned - I don't think the problem is that the broker won't allow you to move the dividends because of the margin. The problem is that maybe the value of the stocks isn't high enough compared to the loan amount.

I would clarify this.
 

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Discussion Starter #8 (Edited)
As someone else mentioned - I don't think the problem is that the broker won't allow you to move the dividends because of the margin. The problem is that maybe the value of the stocks isn't high enough compared to the loan amount.

I would clarify this.
The Broker is questrade. Here is the response I received from customer support when I first tried to withdraw the dividends

Subject: Customer Support Request From MyQuestrade

Dear Mr. XXXXX,

Thank you for contacting us.

Whenever you are borrowing funds from Questrade, all dividends received will go to your Questrade account and will offset amount borrowed. You could be able to withdraw dividends if you have positive account. Questrade does not offer direct dividend payment to your bank account. Sorry for the inconvenience.
 

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This is the response I received from Questrade.

Subject: Customer Support Request From MyQuestrade

Dear Mr. XXXXX,

Thank you for contacting us.

Whenever you are borrowing funds from Questrade, all dividends received will go to your Questrade account and will offset amount borrowed. You could be able to withdraw dividends if you have positive account. Questrade does not offer direct dividend payment to your bank account. Sorry for the inconvenience.
 
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