What if 40% of the remaining 60% Loan To Value (ratio) is not paid, or the borrower wants to take only 60% of the loan?
"The loan-to-value ratio (LTV Ratio) is a lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. It sounds like your lender has a 60% requirement. Remember the home is the collateral for the loan.  If you stop making payments, they can take the house back from you.  That number is less than 100% to accommodate changing market prices, the cost of foreclosure, repairing and reselling the home.  They may be a safety factor built in depending on the home's location.   If you want to buy a $1.8 million dollar home you will have to come up with 40% down payment.  That down payment is what reduces the risk for the lender.  So no, there is no way to cheat that. Think about the transaction from the view of the lender.   Note: in some areas, you can still get a loan if you don't have the required down payment.  You just have to pay a monthly mortgage insurance.  It's expensive but that works for many home buyers.  A separate insurance company offers a policy that helps protect the lender when there isn't enough deposit paid. Update:  Er, no.  Keep it simple.  The bank will only loan you money if it has collateral for the loan. They've built in a hefty safety margin to protect them in case you quit paying them your monthly payments.  If you want to spend the money on something else, that would work as long as you provide collateral to protect the lender.  You mention borrowing money for some other purpose then buying a home.  That would be fine, but you will have to come up with some collateral that protect the lender. If you wanted to buy a new business, the bank would first ask for an appraisal of the value of the assets of the business.  That could be applied to the collateral safety net for the lender.  If you wanted to buy a business that had little appraisal value, then the bank would require more collateral from you in other forms.  Say you wanted to borrow the money for an expensive operation or cosmetic surgery. In that case there is no collateral value in the operation. You can't sell anything from the surgery to anybody to recover costs. The money is spent and gone.  Before the bank would loan you any money for such a surgery, they would require you to provide upfront collateral.  (in this case if you were to borrow $60,000 for surgery, the bank would require $100,000 worth of collateral to protect their interest in the loan.) You borrow money, then you pay it back at a regular interval at an agreed upon rate and schedule.  Same thing for borrowing money for the stock market or a winning horse at the horse race.  A lender will require a hard asset as collateral before making you a loan...   Yes I know you have a good tip on a winning horse,and you are bound to double your money, but that's not the way it works from a lender's point of view.    It sounds like you are trying to game the system by playing on words.  I will say quit using the ""40% to 60%"" phrase.  That is just confusing.  The bank's loan to value is reported as a single number (in this case 60%)  For every $6000 you want to borrow, you have to provide an asset worth $10,000 as a safety guarantee for the loan. If you want to borrow money for the purchase of a home, you will need to meet that 60% safety requirement.  If you want to borrow $1,000,000 cash for something besides a home, then you will have to provide something with a retail value of $1,666,667 as equity. I think the best way for you to answer your own question is for you to pretend to be the banker, then examine the proposal from the banker's viewpoint. Will the banker alway have enough collateral for whatever it is you are asking to borrow? If you don't yet have that equity, and you need a loan for something besides a home, you can always save your money until you do have enough equity.  Comment One. I thought that most lenders had a 75% or 80% loan to value ratio. The 60% number seems pretty low.  That could indicate you may be a high risk borrower, or possibly that lender is not the best for you.  Have you tried other lenders?  It's definitely worth shopping around for different lenders.   Comment Two. I will say, it almost sounds like you aren't being entirely honest with us here.  No way someone with a monthly income who can afford a $1.8 Million home would be asking questions like this.  I get that English probably isn't your first language, but still.  The other thing is: If you are truly buying a $1.8 Million dollar home your real estate agent would be helping you find a lender that will work with you.  They would be HIGHLY motivated to see this sale happen.   All of your questions could be answered in ten minutes with a visit to your local bank (or any bank for that matter.)  When you add up the costs and taxes and insurance on a 30 fixed loan, you'd have a monthly mortgage payment of nearly $10,500 a month or more.  Can you really afford that on your monthly income?" Sorry, I don't think a bounty is the issue here. You seem to understand LTV means the bank you are talking to will lend you 60% of the value of the home you wish to purchase. You can't take the dollars calculated and simply buy a smaller house.  To keep the numbers simple, you can get a $600K mortgage on a $1M house. That's it. You can get a $540K mortgage on a $900K house, etc.  Now, 60% LTV is pretty low. It might be what I'd expect for rental property or for someone with bad or very young credit history. The question and path you're on need to change. You should understand that the 'normal' LTV is 80%, and for extra cost, in the form of PMI (Private Mortgage Insurance) you can even go higher. As an agent, I just sold a home to a buyer who paid 3% down.  The way you originally asked the question has a simple answer. You can't do what you're asking. "Let me summarize your question for you: ""I do not have the down payment that the lender requires for a mortgage. How can I still acquire the mortgage?"" Short answer: Find another lender or find more cash. Don't overly complicate the scenario. The correct answer is that the lender is free to do what they want. They deem it too risky to lend you $1.1M against this $1.8M property, unless they have $700k up front. You want their money, so you must accept their terms. If other lenders have the same outlook, consider that you cannot afford this house. Find a cheaper house." I wanted to know that what if the remaining 40% of 60% in a LTV (Loan to Value ratio ) for buying a home is not paid but the borrower only wants to get 60% of the total amount of home loan that is being provided by lending company. Generally, A lending company {say Bank] will not part with their funds unless you first pay your portion of the funds. This is essentially to safeguard their interest. Let's say they pay the 60% [either to you or to the seller]; The title is still with Seller as full payment is not made. Now if you default, the Bank has no recourse against the seller [who still owns the title] and you are not paying. Some Banks may allow a schedule where the 60/40 may be applied to every payment made. This would be case to case basis. The deal could be done with only paying 20% in the beginning to the buyer and then I have to pay EMI's of $7451.  The lending company is offering you 1.1 million assuming that you are paying 700K and the title will be yours. This would safeguard the Banks interest. Now if you default, the Bank can take possession of the house and recover the funds, a distress sale may be mean the house goes for less than 1.8 M; say for 1.4 million. The Bank would take back the 1.1 million plus interest and other closing costs. So if you can close the deal by paying only 20%, Bank would ask you to close this first and then lend you any money. This way if you are not able to pay the balance as per the deal agreement, you would be in loss and not the Bank. "This is the meat of your potato question. The rephrasing of the question to a lending/real estate executive such as myself, I'd ask, what's the scenario? ""I would say you're looking for an Owner Occupied, Super Jumbo Loan with 20% Down or $360K down on the purchase price, $1.8 mil purchase price, Loan Amount is ~$1.45 mil. Fico is strong (assumption). If this is your scenario, please see image. Yellow is important, more debt increases your backend-DTI which is not good for the deal. As long as it's less than 35%, you're okay.  Can someone do this loan, the short answer is yes. It's smart that you want to keep more cash on hand. Which is understandable, if the price of the property declines, you've lost your shirt and your down payment, then it will take close to 10 years to recover your down. Consider that you are buying at a peak in real estate prices. Prices can't go up more than they are now. Consider that properties peaked in 2006, cooled in 2007, and crashed in 2008. Properties declined for more than 25-45% in 2008; regardless of your reasons of not wanting to come to the full 40% down, it's a bit smarter to hold on to cash for other investments purposes. Just incase a recession does hit.  In the end, if you do the deal-You'll pay more in points, a higher rate compared to the 40% down scenario, the origination fee would increase slightly but you'll keep your money on hand to invest elsewhere, perhaps some units that can help with the cashflow of your home. I've highlighted in yellow what the most important factors that will be affected on a lower down payment. If your debt is low or zero, and income is as high as the scenario, with a fico score of at least 680, you can do the deal all day long. These deals are not uncommon in today's market. Rate will vary. Don't pay attention to the rate, the rate will fluctuate based on many variables, but it's a high figure to give you an idea on total cost and monthly payment for qualification purposes, also to look at the DTI requirement for cash/debt.  See Image below:"
Are you in the US? Because if so, there are tax discrepancies. Gains from sale of stocks held for less than one year are subject to ordinary income tax, so probably around 30%. If you hold those stocks for a year or more, gains will be taxed as capital gains tax, 15%.  For Forex, taxes on your earnings will be split 60/40. 60% will be traded at the lower 15% rate, while the remaining 40& will be taxed at a higher rate, approximately 30%.  So purely short-term, there is a tax advantage to dabbling in Forex. HOWEVER - these are both incredibly risky things to do with your money! I never would recommend anyone invest short-term looking to make quick cash! In fact, the tax code DISCOURAGES people from short-term investments. "As others have pointed out, leveraged investing is investing borrowed money. To do so, you need to convince a lender that you're good for the loan. This usually means you need to have collateral worth what you're trying to borrow, or you need to pay a higher rate to account for the fact that they're gambling that you will remain employed and pay off the loan. Leveraged investing is, in general, a risky move for exactly this reason. You can lose not just your original investment, but everything you borrowed as well. The only time it really makes sense, in my admittedly conservative opinion, is when you (a) can afford to suffer that loss, (b) are pretty confident of your investment, and (c) have assets which you have no intention to sell for the duration of the loan. An ""unneeded"" mortgage on a house is a classic example, thusly: When I purchased my house, I had enough savings that I could have bought it without taking a mortgage. Instead, I took out a mortgage for a large part of that, and left the remainder in my investment accounts -- essentially building the leveraging loan into the mortgage. I then got obscenely ""lucky"" when interest rates fell through the floor due to the Great Recession, and was able to refinance the mortgage to near record low rates. As a result, on that loan -- which, as I say, I'm in the position of being able to pay off at any time without killing my finances -- I'm currently paying about 3.5%, while the cash this has let me leave in my investments is earning several times that... a net win. But again, note that this required collateral. Essentially, all I'm doing is paying a bit to to borrow my own money (part of the value of the house). There really is no easy way to ""convert 25k to 250k"" -- if there was, everyone would be doing it.  There's no magic in investment. Just time and compounding returns and trading off risk against potential gain. The more you try to push it and win big, the more you risk losing big. I really recommend not attempting anything fancy until you're wealthy enough that you can afford those losses. But if you insist on playing in this space, the answer to your question is to buy options. Options are a packaged form of borrowing to invest. Note that they're still considered high-risk unless you know EXACTLY what you're doing, and again I strongly recommend you not put money into them unless you can afford to lose it -- options have a nasty habit of turning from apparent gains on paper to losses remarkably quickly." Here's what I'd do.  Show these figures to your bank, and ask if they can offer you some type of account with a small overdraft, say up to $2000.  Typically this won't pay the same kind of interest as your savings account, but it doesn't matter. If such an account is available, then yes, dump most of your savings into the student loan, and keep a few hundred in your new account.  The overdraft on this account is your emergency fund.  This means that in the more likely scenario (no emergencies) you're saving yourself 6% interest on something like $4000 to $4500.  In the case of an emergency, you're still covered; but you'll be paying a larger amount of interest.  Let's say you have an emergency cost and need to dip into the overdraft for $1000.  If the interest is 15%, then you've cost yourself an extra 9% on that $1000 over leaving that debt in the student loan.  This seems to me like a really good gamble - more likely to gain 6% of $4000, less likely to lose 9% of $1000. If your bank won't give you a low-interest account with a small overdraft, then use your credit card as your emergency fund.  The same kind of logic applies; but since credit card interest rates are typically higher than overdraft interest rates, you'll want to keep slightly more in your savings account.  About $1200 to $1500 feels right to me; and move the remaining $3500 to $3800 to your student loan.   So yes, pay off the student loan.  That 6% interest really is worth having, even if you'd be taking a small gamble. Edit - Alexander Kosubek has suggested that I should compare this to matched retirement plans.  The 100% gain in a matched retirement plan isn't 100% per annum; it's 100% divided across the length of time you have to wait until you can get your hands on that money.  Suppose the money is accessible when you turn 60 - a matched plan is a good deal if you're in your 50's, but not so good if you're in your 20's.  The 100% matching is equivalent to 6% interest per annum compounded over slightly under 12 years.   So if you're less than 12 years away from retiring, go for the matched plan.  Otherwise, pay off your student loan first. I want to take a loan out against an old 401k to use as the down payment on a house. The problem that I've found is that in order to borrow against the 401k it has to be considered current. I'd like to avoid rolling it over to my current job because then if I quit the entire load has to be repaid within 60 days.  I'm specifically wondering if me plan of starting a company with a 401k will work. From what I can tell, there's no limit on the number of current 401ks you can have. Since I'm obviously never going to fire myself, having to suddenly repay the entire loan won't be a problem.   I'd like to keep my job and money related to investments separate. Sometimes I think it helps to think of the scenario in reverse. If you had a completely paid off car, would you take out a title loan (even at 0%) for a few months to put the cash in a low-interest savings account? For me, I think the risk of losing the car due to non-payment outweighs the tens of dollars I might earn. You lose your interest free grace period if you don't pay your balance in full every month by the due date. So you would be paying interest on the $70 amount from the date you bought it to the date you made the $70 payment, and interest on the $30 balance from the date of purchase and thereafter. A mortgage will show as a lien on your property. Say your home is worth 400,000 (money units) but you only owe 200,000. A lender may be willing to be second in line, lending you another 100,000. I'd split whatever cash flow you have between saving money and paying down the 20% loan. The fact that you are carrying an unrealized loss isn't really too relevant -- unless you have plans to walk away from the loan or go bankrupt, it doesn't really matter until you sell. You're either going to repay now or later.