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High-end vacation properties are more than just luxurious getaways—they’re prime investment assets. For affluent individuals looking to acquire or leverage such properties without the limitations of traditional income-based lending, asset-based lending (ABL) has emerged as a powerful financing tool. This guide explains how ABL works, its benefits, and why it’s increasingly popular in the luxury real estate market.
Asset-based lending allows borrowers to secure loans using the value of their assets rather than their income or credit history. In the context of vacation properties, the real estate itself (or other high-value assets like investment portfolios or luxury vehicles) serves as collateral for the loan.
Traditional lenders scrutinize debt-to-income ratios, which can be limiting for individuals with irregular or non-salaried income (e.g., entrepreneurs, investors, retirees). ABL focuses on net worth, not monthly income.
Affluent buyers often have substantial assets but may not want to liquidate them or show traditional income sources. ABL allows them to leverage these assets to purchase a vacation home without disrupting their portfolio.
Speed matters in competitive luxury markets. ABL lenders can often provide funding more quickly, enabling faster closings and giving buyers a competitive edge.
Already own luxury real estate? ABL can be used to tap into that equity for renovations, purchasing another home, or investing elsewhere—without refinancing or selling.
While ABL offers flexibility, it comes with considerations:
Always work with a trusted lending advisor to ensure the structure aligns with your long-term financial goals.
It depends on the borrower’s financial profile. For those with significant assets but inconsistent income, ABL can offer greater flexibility and speed than a traditional loan.
Yes. Many ABL lenders accept liquid assets such as stock portfolios or luxury vehicles in addition to real estate.
Yes, many private lenders and boutique institutions offer asset-based loans for foreign nationals investing in U.S. luxury properties.
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Our advise 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.