Hi everyone.
Last July I purchased a property off the plan for 530k in Canberra. It's a 3 bedroom 2 bathroom 2 garage seperate title townhouse. I negotiated a few good additions for free ( ducted to entire house as opposed to one aircon unit, caeser stone bench top) which should help add to the value. The house is due for completion in April and house prices seem to have gone up a fair bit in Canberra since then so I'm thinking it could come back evaluated 570-580k.
Now I've been wanting to purchase Bitcoin again for a while. I've been in it previously but I sold at a loss as my mortgage broker said I needed 20% to get pre-approved ( I had around 13%) I didn't want to sell but I did in order to get it. Needless to say it's gone up dramatically since then and I'm kicking myself about it. It's my own fault as I didn't reach out to other banks for their advice which it turns out I'd have been fine on 10-12% and pay LMI.
My question is would it be ridiculous of me to use the equity I have in the home and borrow more from my bank in order to purchase 30-45k of Bitcoin since the bank will loan me 20% of the evaluated value. Interests are incredibly low at the moment and I could see myself getting ahead more by utilising this low loan rate and banking on Bitcoin.
Once I move in I'll receive 25k from the government from their building stimulus scheme which will go towards purchasing some appliances and furniture. I should have around 10k spare.
I'm currently on just under 60k a year, clearing $950 a week after tax. If I proceed as planned borrowing 80% which is 424k my repayments will be around $365 a week on a 3 year fixed term leaving me $585 a week to live on.
If I was to borrow an additional 40k to throw into Bitcoin( 80% of 580k) my repayments would go up to $400 a week, leaving me $550 a week to live on. The house is 7.8 energy stars with 2.2kw solar so I don't imagine my utilities will be too much.
I'm a big believer in Bitcoin and could see it hitting 200k by the end of year. I understand it could also be worth a lot less than it currently is. I'm looking to hold long term.
Is it mad that I even consider borrowing an additional 40k to throw into Bitcoin ? The other two bedrooms would be empty so if I struggled financially I could rent a room out for around $250 to help.
Another option I considered was not borrowing anymore than I needed, renting a room out and paying as much into the mortgage as I could in order to purchase a second property in a year or so. This seems the more sensible route?
I don't see myself getting ahead from working in retail alone so I'm looking at other means to get ahead in life.
I apologize for the long post and appreciate all your replies.
Cheers,
Edit: Thank you to everyone that has replied. I've decided against borrowing any additional money from the bank. I really hadn't thought the idea through and how badly it could turn out. I still believe in Bitcoin and will invest but only a small amount each month that I wouldn't lose sleep over if it went to zero.
Tl:dr
But why not borrow the money and go to the casino?