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When seeking liquidity, especially for high-net-worth individuals or homeowners with substantial equity, two flexible financing tools often rise to the top: Jumbo Interest-Only Home Equity Line of Credit (HELOC) and Private Bank Securities-Based Lines of Credit (SBLOC). Both offer significant borrowing power, but their structures, risks, and benefits differ.
In this article, we’ll compare these two options in-depth to help you make a confident, informed decision tailored to your financial needs.
What is a Jumbo Interest-Only HELOC?
A Jumbo Interest-Only HELOC is a credit line secured by your home, typically used by borrowers with significant equity and high credit scores.
Key Features:
- High Loan Limits: Designed for homes valued above conventional loan limits (currently $766,550).
- Interest-Only Payments: Borrowers can pay only the interest during the draw period (usually 5–10 years).
- Secured Loan: The line is backed by your home, which affects risk and potential interest rates.
- Flexible Draw Period: Access funds as needed, repay, and borrow again within the draw term.
Best for: Homeowners seeking large sums of capital for home improvements, investments, or other large expenses with the flexibility of low monthly payments during the draw period.
What is a Private Bank Securities-Based Line?
A Securities-Based Line of Credit (SBLOC) lets you borrow against a portfolio of stocks, bonds, or other eligible securities without liquidating your investments.
Key Features:
- No Asset Liquidation: Keep your investments intact and avoid capital gains taxes.
- Quick Access to Funds: Many banks offer same-day or next-day funding.
- Interest-Only Options: Pay interest monthly and preserve capital.
- No Impact on Home Equity: Your real estate is not involved or encumbered.
Best for: Investors looking to maintain market exposure while tapping into liquidity for a large purchase, business investment, or tax planning strategy.
Jumbo Interest-Only HELOC vs Private Bank SBLOC: A Side-by-Side Comparison
| Feature | Jumbo Interest-Only HELOC | Securities-Based Line (SBLOC) |
| Collateral | Home equity | Investment portfolio |
| Loan Amount | Up to 85% of home value | Typically 50-95% of portfolio value |
| Interest Rates | Variable; generally lower due to real asset | Variable; may be higher than HELOC |
| Payment Type | Interest-only during draw | Interest-only or minimum payment |
| Tax Deductibility | May be deductible if used for improvements | Not tax-deductible |
| Risk | Foreclosure risk if defaulted | Margin call risk if portfolio drops |
| Speed of Access | Can take weeks | Often within 1–3 days |
| Credit Score Impact | Hard credit pull | Usually no hard inquiry |
Choosing the Right Option
Your choice between a Jumbo Interest-Only HELOC and an SBLOC depends on:
1. Your Liquidity Needs
- Want funds fast without touching your home? SBLOC is ideal.
- Planning renovations or need prolonged draw access? Consider a HELOC.
2. Risk Tolerance
- HELOC: Tied to real estate—failure to pay risks your home.
- SBLOC: Market downturns may trigger margin calls, forcing you to add collateral or repay quickly.
3. Tax Planning & Investment Strategy
- SBLOC is a tax-efficient way to access cash without selling assets.
- HELOC can offer mortgage interest deductions if used for qualifying expenses.
FAQs
What credit score do I need for a Jumbo Interest-Only HELOC?
Most lenders require a minimum FICO score of 700+, but ideal rates are reserved for 740 and above.
Can I use both a HELOC and SBLOC at the same time?
Yes, if you have sufficient assets in both real estate and investment portfolios, using both tools can diversify your borrowing strategy.
Is there a prepayment penalty on either?
Most HELOCs and SBLOCs don’t have prepayment penalties, but always check lender terms.
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Final Thoughts
Both Jumbo Interest-Only HELOCs and Private Bank Securities-Based Lines offer strategic ways to access capital without liquidating key assets. Choosing the right product depends on your financial situation, time horizon, and risk appetite.
Unlock Your Home Equity with Figure
- Approval in 5 minutes. Funding in as few as 5 days
- Borrow $20K-$400K
- Consolidate debt or finance home projects
- Fastest way to turn home equity into cash
- 100% online application
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
