A securities-based line of credit can help meet liquidity cash needs byunlocking the value of your investments without selling them. Some of theadvantages of securities-based borrowing include:
- Access to cash when you need it, potentially avoiding capital gains taxes fromselling securities2
- Typically, lower rates than other forms of credit
- No set-up, non-use, or cancellation fees
- Ability to borrow between 50% to 95% of your eligible assets, depending on thecollateral and type of credit you receive
These lines of credit can be used for many purposes. Common uses include:
- Home renovations
- Real estate purchases2
- Expenses such as taxes
- Boat, car, or other luxury purchases
- Business opportunities
- Borrowing against securities may not be suitable for everyone. If the value ofthe securities should decline below a minimum level, you may be subject to acollateral call without specific advance notice, requiring you to depositadditional cash or securities. If you cannot do so, all or a portion of yourcollateral could be liquidated, and a potentially taxable event could result.You are not entitled to choose which securities are sold or any extension oftime to meet a collateral call. A concentrated portfolio holding a single or afew securities may be subject to greater risk of a collateral call than adiversified portfolio; a diversified portfolio will tend to be less subject toa sharp decline resulting from the negative performance of a single security.Availability, qualifications, and other restrictions may vary by state. Askyour Financial Advisor for details.
- You can use a non-purpose securities-based line of credit for any purpose exceptto purchase, carry, or trade securities; refinance or repay margin loans; orrepay any other loan used for securities purchases. A margin account is theonly securities-based line of credit you may use to purchase securities.
