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Create Your Own Story
Buying a Home with an SBLOC
The SBLOC is a strategic way to generate liquidity while preserving assets. As a long-term liquidity source with competitive rates and flexible terms, the SBLOC can simplify the storyline for building client wealth.
Buying a new home can be the next chapter in a client’s life. However, today’s competitive housing market requires being able to quickly close the deal. Whether it’s bridging the funding gap between an existing home sale and a new home purchase or needing additional cash to buy a second home, buyers may fall short of the liquidity they need. While personal or home loans can help, the paperwork and underwriting requirements can take some time, resulting in a missed opportunity.
The SBLOC Takes Center Stage
The good news is that there’s more than one way to generate liquidity when your clients want to buy a home. With The Bancorp Securities-Backed Line of Credit (SBLOC), clients can borrow up to 95% of their portfolio value based on asset type.1 The SBLOC is an interest-only credit line that has no end term. With competitive fixed and variable interest rates, the credit line can be more cost-efficient than conventional loans. When time sensitive opportunities present themselves, the SBLOC’s automated application and underwriting processes streamline the path to funding.
If you're not sure that the SBLOC is right for your clients, we’ve included a real-life example of how the SBLOC helped a prospective homebuyer rewrite the ending of their wealth story.
Setting the Scene for a New Home Purchase
A financial professional contacted The Bancorp Institutional Banking team about a client who was looking to finance a new home purchase with recently gifted stock. After careful consideration, the financial professional realized that selling the stock would result in capital gains taxes for the client. The financial professional recommended the SBLOC as an alternative way for the client to access liquidity without having to sell their portfolio assets.
Setting the Scene for a New Home Purchase
By taking the financial professional’s advice, the client was able to use the SBLOC to buy a new home, maintain ownership of their stock, and avoid paying $130,000 in capital gains taxes. The financial professional, using the SBLOC as a strategic wealth management tool, retained his client’s $3 million portfolio and gained $1 million in new assets under management (AUM).
Headlining Wealth Strategies with an SBLOC
The Bancorp SBLOC is an innovative lending option that provides timely access to funding. Clients, by leveraging the value of nonretirement assets in their portfolio, can play a more proactive role in managing their liquidity needs and building their wealth. In addition to buying a home, clients can use the credit line to pay for home renovations, emergency repairs, and more.3
For financial professionals, the SBLOC offers a way to retain client investment strategies and provide them with more financial flexibility. With no application fees or fees for the portion of the line not in use, clients can apply for an SBLOC in advance of any liquidity needs and have cash on hand when they need it most.4
If you’re worried about your client’s pledged assets during times of market volatility, rest assured that we’ve designed our SBLOC to promote clients' portfolio health. Check out our blog, ""What Market Volatility Means for
Stay tuned for more SBLOC case studies in our next installment of the Create Your Own Story series.
Opinions, findings, or perspectives contained in this blog are those of the authors.
All references to “The Bancorp” refer to The Bancorp Bank, N.A., the wholly-owned subsidiary of The Bancorp, Inc.
1. The 95% advance rate is for an all-cash portfolio.
2. This case study of an actual client experience shows a potential use of the Securities-Backed Line of Credit (SBLOC). Individual borrower’s results may differ based upon multiple variable circumstances and factors, including, but not limited to: tax and other liabilities, SBLOC borrowing rates, and portfolio drawing power.
3. The SBLOC cannot be used to purchase additional securities or to pay off a margin loan that was used to purchase securities.
4. The Bancorp Bank, N.A. does not charge an application fee. State, local, and/or third-party fees may apply in some states.
Collateral-based borrowing may not be suitable for everyone. Consult a ﬁnancial advisor about any associated risks. Consult a tax advisor for tax-related matters and an attorney for legal matters. The Bancorp Bank, N.A. does not provide ﬁnancial, tax, or legal advice. Rates, terms, and conditions of loan products are subject to change without notice.
Securities Based Loan
Securities Based Lending
Portfolio Line of Credit