Using the equity in your home

The second way of borrowing to buy shares is to simply use the equity in your home. If you have built up sufficient equity, banks usually allow you to draw it down for investment purposes. The drawback here is that if you over-extend yourself, you could end up losing your home if your shares perform poorly.

With these points in mind borrowing to buy shares needs to be carefully thought through. When you are starting out, the odd mistake is inevitable. Because debt can multiply your losses, just one serious mistake could see you end up considerably worse off than when you began.

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