It’s been almost a full year since the Federal Reserve stopped raising rates, and since then I’ve noticed that our affluent banking clients are now comfortable and have adjusted to where interest rates are holding (the Prime Rate is currently 8.50%). While before they didn’t want to borrow due to higher rates, now they have decided it’s time to remodel their home, buy or build a new home, or purchase that vehicle or boat they had been putting off.
Home equity loans and lines of credit are still popular and may be the appropriate solution if there is enough equity (collateral) available in the client’s home. However, there are affluent individuals that are taking a different approach to their financing needs – Securities-Based Financing. This type of financing offers liquidity by using a non-qualified (taxable) investment account as collateral for either a loan or line of credit. The advantages are:
- It can be quickly established (no need for an appraisal, title, flood, etc. that home equity financing requires).
- It provides access to funds without needing to sell securities in the investment account, which could create a taxable event.
- The rate is very competitive and may even be lower than home equity financing options.
As with any financial decision, deciding how to finance your current need requires a conversation with your banker and agreeing on the solution that will be most beneficial to you.
For more information or to apply, contact Ron Jahnke.
Ron Jahnke
Vice President - Private Banking Officer
(262) 522-7405
NMLS #: 777858
