Need Funds Urgently for House Repairs. Unsecured Personal Loan The Best Option?

Tdsr on 17/02/2021 - 01:53

So I need to urgently come up with $5k because the ceilings in my house are sagging and one room in particular needs it removed and replaced.

I have $1k available to redraw from my home loan and $9k in the stock market, but no other funds. I’d prefer not to liquidate my stocks due to tax issues and good performance.

I’m looking at an unsecured personal for a year. Sympleloans gave an indicative rate of 12% but with no credit check, though I have excellent credit.

Are there any other options I should consider? Is converting my home loan from P&I to I-only possible to pay off the unsecured loan quicker? Using Citibank “quick cash”?

Thanks guys

Financial

Comments

  • djkelly69 on 17/02/2021 - 02:07
    +4

    Is sagging ceilings that urgent? I would be looking at extending the home loan or refinancing.

    • Tdsr on 17/02/2021 - 23:28

      Dangerously urgent apparently

  • Jolakot on 17/02/2021 - 02:16
    +22

    No rainy day funds? Owning a house and only having 1k liquid seems risky as hell.

    Sell 4k of shares, use that money, rebuy later. No interest to be paid, can call it dollar cost averaging.

  • Nalar on 17/02/2021 - 02:33
    +4

    Can you refinance your home loan and take advantage of this type of deal: https://www.ozbargain.com.au/node/567167

    • Tdsr on 17/02/2021 - 23:30

      Thanks! I’ll look into it once I’m a bit better financially in a few months hopefully. At the moment I think I’m too on the margin to get approved

  • whitelie on 17/02/2021 - 03:28
    +7

    How much tax are you going to cop selling $4k in shares?
    If it's less than the ~$450 (plus is there establishment/monthly fees?) you'll pay in interest on the $5k loan at 12%, you have your answer.
    Can you make additional repayments to pay it off early? As in can you afford to given you only have 1k in savings/redraw…Plus will the loan terms allow you to?

    If you can refinance your home loan in to a better rate at the same time, that would probably be the best solution but you'll need to have a decent LVR so may not be possible without additional costs. If you can't then the personal loan is probably the best bet provided you can pay it off quickly.

  • garetz on 17/02/2021 - 03:42
    +9

    When you have an emergency is when you are supposed to liquidate your assets rather than go in debt.

    • Tdsr on 17/02/2021 - 23:38

      Do you have any links to more detailed advice about why this is the case? I figure its cheaper to go into debt, though I do recognise its a bit riskier but at the moment my $9k has a 40% return, so it would have to fall a long way before it breaks even with debt

      • avoidfullprice on 18/02/2021 - 10:37

        9k with 40% return, so 6.4k principal and 2.6k gain?

        Assume you held them for less than 1 year so you don't get CGT discount, and your marginal tax rate is 32.5%. You only need to sell 5.5k worth of shares, realise 1.6k of gain and pay $550 of tax.

        If you borrow 5k loan at 12%, and pay back P&I monthly, you fork out $330 of interest. Suppose your share held that 40% return, and you sell in a years time with CGT discount, you sell 5.5k worth and pay $275 of tax. All up it costs you $605.

        So based on that assumption, I don't think getting personal loan is financially better than liquidating shares.

        Now you would say but after 1 year you don't need to sell that shares. Yes, but I factor in the lost future money you would've "invest" during the year to compare. The endstate for both will have your repair done and 5k in an emergency fund. There are also other ways to compare and yield different outcomes.

        Not financial nor professional advice, of course.

  • JIMB0 on 17/02/2021 - 05:10
    +2

    Using Citibank “quick cash”?

    They often have deals where you pay a 2.5% establishment fee and 0% interest for a year.

    • Tdsr on 17/02/2021 - 23:40

      Thanks. I looked into it more after your comment and checked my spam and saw my offer was 6% with a $100 gift card and I’ve since gone with that. Especially with no monthly account fee or early payment fees

      • JIMB0 on 18/02/2021 - 04:34

        Wait until you get the giftcard before paying it off early.

  • morse on 17/02/2021 - 05:32
    +2

    I like nalar and whitelie’s suggestions. If you can get a refinance bonus that’s great. If that doesn’t cover what you need, you’re probably better off selling some of your shares than paying the 12% on a loan, particularly if you can’t see yourself having an increase in income in the near future. It will likely to be disappointing for you to sell your stocks but better than getting into debt with a high interest loan.

    You’ve probably already considered this, but make sure you’re getting a fair price for the ceiling work ie get a few quotes.

    You could also look into DIY. My unqualified husband has done some pretty successful plastering. Ceilings are difficult, and you definitely need two people at least but potentially worth looking into, even if you have a handy friend that might be willing to help.

    Again you probably already know this but make sure you’ve also identified and repaired the cause of the sagging ceilings eg leaking roof, rising damp. Otherwise your repairs won’t last long.

    Longer term if you’re living pay check to pay check you might want to consider seeing a financial counsellor or just having a really good look at your income vs expenses so you don’t end up in a debt spiral. These kind of things come up, so a buffer is a good idea.

    • Nalar on 17/02/2021 - 05:46

      Maybe an investment in Barefoot might be on the cards.

  • moneyhungry on 17/02/2021 - 05:52
    +3

    First check why the ceilings are sagging, may be from water damage and you should start on the roof.

    • Richardc on 17/02/2021 - 06:43
      +2

      +1, might be a $20 fix or $20k fix.

  • Third_Gear on 17/02/2021 - 07:10
    +2

    Push up on the sagging ceiling. Are nail heads popping out? If so just pull them out with pliers and put some new screws in. Plaster and paint. Super easy to fix.

  • GettingThePlus190s on 17/02/2021 - 07:13
    +6

    Sell your shares! 12% Jesus

  • ihbh on 17/02/2021 - 07:48
    +1

    Assess the risk of each option by doing some scenario analysis:

    What if the stockmarket crashes (-30 to 40% returns) shortly and you lose your job?

    • Personal loan
    • Sell shares

    Other scenarios

    • Personal loan
    • Sell shares
  • Muzeeb on 17/02/2021 - 08:06
    +4

    I have started a gofundme for you…

    www.gofundme.com/saggy_roof

  • Heaps for Cheaps on 17/02/2021 - 08:18
    +1

    If it seems like it will fall imminently, maybe use 1 or 2 of these with a plank of wood
    https://www.bunnings.com.au/gorilla-1-98-3-35m-galvanised-fo…

    Then you might have a lot more time to think of options

    • onetwothreefour on 17/02/2021 - 08:37
      +2

      2 of those will wipe out 20% of his savings!

      • Heaps for Cheaps on 17/02/2021 - 08:39

        He might have to buy them, wrap them in plastic to keep them brand new, and then return them in a few months… lol

  • holdenmg on 17/02/2021 - 08:37
    +4

    Is this a Property Insurance claim?

    Worth asking before you do any selling of assets or borrowing.

    • Tdsr on 17/02/2021 - 23:47
      +1

      Thanks. I have asked the question and they said there’s no excess unless it’s a successful claim, and will send an assessor out tomorrow

  • dust on 17/02/2021 - 09:02

    Sell the shares! Unless you're anticipating greater than 12% returns after tax on your shares you're better off selling them.

  • Hardlyworkin on 17/02/2021 - 09:06
    +4

    Sounds like an ad for Wallet Wizard (hint: don't do it!).

    • Seraphin7 on 17/02/2021 - 09:22
      +1

      Just nimble it and move on!

    • Tdsr on 17/02/2021 - 23:49

      Haha it was not even under consideration as I just assumed the rate would be ridiculous

  • dirtybigbjelke on 17/02/2021 - 09:07
    +1

    $340-00 in interest over 12 months, less if you can somehow pay off earlier from say a tax return or work bonus. Need to balance that against what selling your shares will cost you or the fees from a loan re-finance and how much you will pay rolling 5k into the say 25 year term of your loan. Short term unsecured debt is not always the worst idea.

  • Therage on 17/02/2021 - 10:20
    +5

    For $5k have you thought of getting a Credit card with a 5k limit? Find one that has a low interest rate offer, some even go as low as 0% if you are lucky.

    • alphanumericbargains on 17/02/2021 - 10:36
      +1

      This is a reasonable approach. Find something that has a promo of 0% interest(purchase rate) for the first few months(some go up to 15 months). You could pay minimum monthly then pay the bulk before the interest-free period ends. Or, you could balance transfer the remaining to another low-rate card that has 0% promos on balance transfers(some might have BT fees but some don't, some go up to 24 months 0%).

    • Tdsr on 17/02/2021 - 23:51

      Thanks. I looked into this but decided it would take too long to apply and get the card given I need the funds in a week or two

  • orangetrain on 17/02/2021 - 10:42
    +3

    You have a house and only 1k cash???

  • netjock on 17/02/2021 - 10:57

    $5k for someone else to do it or DIY?

    I'll suggest you suck up to your mates and spend a few weekends sorting it out.

  • watwatwat on 17/02/2021 - 11:04

    It sounds like you over-invested in the stockmarket.

    It's a bit weird that you thought straight to getting a personal loan rather than liquidate your stock.

    • dasher86 on 17/02/2021 - 11:51
      +1

      bit weird not to have an emergency fund on top of investments in the market.
      And only $1k available as redraw.

  • Discotheque on 17/02/2021 - 11:09
    +2

    Go through insurance (if you have any) and lodge a claim. Don't pay excess until all reports have been reviewed and received to avoid waiting on a refund if your claim is declined. Then look at financial options others are saying here.

    • Tdsr on 17/02/2021 - 23:53
      +1

      Thanks. I contacted them after your comment and will see the assessor tomorrow

  • terlalu on 17/02/2021 - 11:12

    just ask the builder if you can pay it off in installments

    • Muzeeb on 17/02/2021 - 11:16

      A slab of VB per week?

      • watwatwat on 17/02/2021 - 11:17

        Slab of Fosters mate.

  • Heaps for Cheaps on 17/02/2021 - 11:39
    +2

    Ask the builder if he can get paid with exposure bucks, with you creating lots of Tik Tok / Insta sponsored posts.

  • Alan Laz on 17/02/2021 - 11:51
    +1

    Gee if you were my brother I'd sling you the money in minutes no questions asked (but as you're not….)

    Are you sure there aren't family members you can tap?

    You gotta conserve assets but minimise your interest rate debt load. Family money is the best,

    you seem financially exposed

  • tsunamisurfer on 17/02/2021 - 12:03
    -1

    If you are getting a $5k loan @ 15% and you need to put your mortgage into IO to cover that, you are in trouble.

    Sell shares or other chattels.

  • commoncents on 17/02/2021 - 12:44
    +3

    2 people I know have had this happen and could claim under house insurance. 1 was in a garage but under the main roof, the other in a bedroom. I'd be checking insurance first (hoping you have insurance!).

  • whooah1979 on 17/02/2021 - 16:00

    $9k in the stock market, but no other funds. I’d prefer not to liquidate my stocks due to tax issues and good performance.

    People that own digital assets may take out loans without liquidating their assets. They can do this without worrying about loan applications, credit scores or CGT.

    • deme on 17/02/2021 - 16:47

      What shitcoin should we buy today?

      • whooah1979 on 17/02/2021 - 17:28

        People can't go wrong with either AUD or USD.

  • deme on 17/02/2021 - 16:48

    Housing market crash coming soon.

    • holdenmg on 17/02/2021 - 17:03

      Still waiting…

  • Keplaffintech on 17/02/2021 - 22:08
    +2

    Emergency fund comes way before investing.

    Sell your shares, you're in no position to be investing. Work towards an emergency fund of ~4 months living expenses.

    See https://imgur.com/NmP4zCu

    Or ignore the advice of everyone here and get a 12% loan.

    • Tdsr on 18/02/2021 - 00:02

      Thanks. Image was too low res to see clearly. Do you have a higher res version?

      My plan now be to stop investing (but not sell), borrow the money at 5.99% through my credit card, pay that off ASAP and then build the emergency fund

      • Keplaffintech on 18/02/2021 - 08:43

        You should be able to zoom into the image to read the details.

  • runamuck on 17/02/2021 - 23:11

    Borrow from relatives?

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