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Buy that Dream House and Preserve Investments with a Securities-Backed Line of Credit

Greg Fat, VP, Business Development Officer | Institutional Banking | 3/25/2020 3:06 PM

Do clients often come to you to discuss the quick purchase of a new home or another piece of real estate? Perhaps it is that one last spot in a retirement community or a new beach house that was just listed. These opportunities often require timely access to assets that may be tied up in their investment account or a pending home sale.

In such cases, clients typically have two courses of action that both have downsides.

  1. Liquidate investment funds
    Clients can access assets that they already own but may need to pay burdensome capital gains taxes, interrupt their investment strategy and have a waiting period before the funds can be released—missing the opportunity altogether.
  2. Take out a home equity loan or other line of credit
    While this enables clients to preserve their investment portfolio, there may be a lengthy application process and costly closing fees.

The good news is that there is a third option that can provide your clients with access to funding and save them both time and money.

SBLOCs: A Timely and Cost-Effective Solution for Homebuyers

Advisors and clients often turn to The Bancorp Securities-Backed Line of Credit (SBLOC) for liquidity to purchase real estate without the tax ramifications of selling securities, and without interrupting their meticulous investment strategy. SBLOCs enable clients to efficiently and effectively leverage non-retirement-invested assets to secure a flexible, fee-free line of credit by pledging their investment portfolio as collateral. Most importantly, SBLOCs provide convenient access to liquidity to pay for real estate or construction costs, and meet other cash needs all year long.1


Additional benefits of The Bancorp SBLOC program include:


  • No income verification for individuals, joint accounts or trusts
  • No application fee, no annual or monthly fees2
  • Simple application and underwriting process
  • No obligation to use the line
  • Easy access to funds via wire transfer or check writing

If you work with clients who make real estate purchases, a Securities-Backed Line of Credit could be a great addition to any non-qualified investment portfolio. Clients can apply for an SBLOC account when opening their investment accounts, allowing them to reap the benefits of immediate access to funding for future opportunities.3


1. The SBLOC is a non-purpose loan, the proceeds of which cannot be used for the purchase of securities or to refinance a loan used to purchase securities. Clients should consult a tax advisor for tax-related matters and an attorney for legal matters.

2. The Bancorp Bank does not charge an application fee. State, local, and/or third-party fees may apply in some states.

3. Securities-based lending has special risks and may not be suitable for everyone. Financial advisors should ensure that clients understand any associated risks.

 

The opinions, findings, or perspectives expressed in this content are those of the author and do not reflect the official policy or position of The Bancorp, Inc., its affiliates, or its or their employees.