Updated over 7 years ago on . Most recent reply
Cash as Collateral for LOC
Anyone using cash as collateral for a line of credit? I've got a local bank that will provide LOC that's 2.5x the cash amount (100k in cash gets you a 250k credit line). Curious if others are getting better/worse offers...
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That's no different from getting 4:1 margin (75% LTV) from your brokerage account. My brokerage will lend me 75% of my stock portfolio to borrow. Technically I can withdraw half the money from the brokerage (then the margin dips to 2:1) and buy real-estate. My brokerage charges interest of 1.65% on loans over 200k and 1.21% interest on loans over 1.5M and get this, a whopping .97% interest on loans beyond 3.5M, :)
Your local bank might be using investment-oriented brokerage account to do a cash as collateral swap.