You're retiring and want to downsize to your dream house. However, you have a problem: You need to use the proceeds from the sale of your current home to pay for the new one.
One option you might consider is using a securities-based loan (SBL) or line of credit as a bridge financing solution, potentially providing quick and easy access to the low-cost capital needed to lock in your offer while waiting for your own home to sell.
Securities-based lending is when you use the non-retirement portion of your investment portfolio (e.g., stocks, bonds, mutual funds) as collateral for a revolving line of credit. Essentially, SBL allows you to leverage the assets in your investment portfolio to fund non-investment activities. Once an SBL line of credit is established through your brokerage firm or bank, funds are usually accessible within a few days and can be used for a variety of purposes.
If you are considering an SBL line of credit, you should have a substantial, well-diversified, non-retirement portfolio. Some brokerage firms and banks will assess your ability to repay as part of the SBL approval process and/or may require you to have a certain account balance within your investment portfolio. A securities-based lending line of credit can typically provide greater repayment flexibility than other lending options. In addition, SBL can be a cost-efficient way to unlock the liquidity in your non-retirement investment assets. Lending rates are typically close to the inflation rate and are generally lower than the rates associated with credit lines from home equity lines of credit (HELOCs), credit card advances, and other lending instruments.
It is important to keep in mind that there are risks associated with SBL, and it is not suitable for all investors. Generally, SBL lines of credit have variable interest rates; when interest rates rise, your cost of borrowing will increase.
In addition, there is the possibility of a market downturn or unusual market volatility, which can have a significant effect on the value of the securities
in the investment portfolio that serves as collateral for your line of credit. If the value of the securities falls below a certain threshold, your lender may require you to pay down the line of credit or pledge additional eligible securities in order to maintain the loan. In addition, the securities can be\ sold (with or without advance notice) to meet maintenance calls at your lender's discretion, which may cause you to suffer adverse tax consequences.
Securities-based lending has special risks and is not appropriate for everyone. Margin accounts can be very risky, and they are not appropriate for everyone. Investors must meet certain financial requirements in order to establish a margin account and accept the increased risk. Before opening a margin account, you should fully understand that: you can lose more money than you have invested; you may have to deposit additional cash or securities in your account on short notice to cover market losses;you may be forced to sell some or all of your securities when falling stock prices reduce the value of your securities; and your brokerage firm may sell some or all of your securities without consulting you to pay off the loan it made to you. All investments are subject to market fluctuation, risk, and loss of principal. When sold, investments may be worth more or less than their original cost. Diversification is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss.
Using securities-based lending to optimize debt as part of an overall financial plan may not be suitable for all investors and carries certain risks. Discuss the benefits and risks with your financial and/or tax professional. Financing real estate and other illiquid purchases with a securities-based line of credit carries risks and may not be appropriate for your needs. A complete assessment of your circumstances may help determine the best loan for your purpose.
This content has been reviewed by FINRA. Prepared by Broadridge Advisor Solutions. © 2026 Broadridge Financial Services, Inc.