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Investing in a mountain property—whether it’s a vacation home, a rental asset, or a primary residence—offers breathtaking views, serene getaways, and long-term financial potential. However, choosing the right financing strategy is crucial, especially in high-value markets like Colorado, Utah, or the Pacific Northwest. Two popular options are Home Equity Lines of Credit (HELOCs) and Securities-Based Lending (SBL). This article will break down both options to help you determine which best fits your financial goals and property plans.
What Is a HELOC?
A Home Equity Line of Credit (HELOC) allows homeowners to borrow against the equity in their property. It functions like a credit card with a revolving balance, flexible draw period, and variable interest rates.
Key Features:
- Based on your home’s equity
- Flexible draw and repayment periods
- Typically lower interest rates than unsecured loans
- Often used for renovations or second homes
Pros:
- Lower rates than credit cards or personal loans
- Interest may be tax-deductible if used for qualified home improvements
- Flexible access to funds over time
Cons:
- Requires significant home equity
- Variable rates can increase over time
- Your home is collateral—risk of foreclosure if defaulted
👉 Related: Understanding HELOC Options for Real Estate Investors
What Is Securities-Based Lending?
Securities-Based Lending (SBL) lets you borrow against your investment portfolio—stocks, bonds, or mutual funds—without liquidating those assets.
Key Features:
- Uses investments as collateral
- Quick access to funds without triggering capital gains taxes
- Ideal for short-term liquidity needs or bridging finance
Pros:
- No need to touch your home equity
- May offer lower rates than traditional loans
- Funds can be used for virtually any purpose, including purchasing property
Cons:
- Market volatility could trigger margin calls
- Cannot use retirement accounts as collateral
- Risk of asset liquidation during downturns
👉 Pro Tip: Use an SBL to secure a mountain property quickly while planning a more permanent financing solution.
HELOC vs. SBL: Which Is Better for Mountain Property Financing?
| Criteria | HELOC | Securities-Based Lending (SBL) |
| Collateral | Primary or existing home equity | Non-retirement investment portfolio |
| Interest Rates | Usually variable, based on prime rate | May be fixed or floating, often lower |
| Use Case | Home improvements, second homes | Liquidity needs, fast property purchase |
| Risk | Risk to home in case of default | Risk to portfolio during market downturn |
| Tax Benefits | Possible tax deduction (home-related) | No tax benefits; avoids capital gains |
Expert Tip: For high-net-worth individuals with substantial portfolios, an SBL can offer flexibility without impacting mortgage leverage ratios. However, if you have significant equity in an existing property, a HELOC might provide a more straightforward and cost-effective route.
Real-World Example: Buying a Cabin in Vail, CO
- Scenario 1 (HELOC): You own a primary home with $500,000 in equity. You open a $250,000 HELOC at 6% interest to purchase a $600,000 mountain cabin, using the HELOC for the down payment and a mortgage for the rest.
- Scenario 2 (SBL): You hold $1M in stocks. You take a $300,000 SBL at 4.25% interest, preserving your home equity and using the liquidity for a cash offer, giving you a competitive edge in a tight market.
CTA: Want help comparing your specific financing options? Schedule a free consultation with a financing advisor today.
Frequently Asked Questions
Can I use both a HELOC and SBL to finance a mountain property?
Yes, combining both allows you to leverage multiple assets, giving you greater financial flexibility and negotiating power.
Is interest on an SBL tax-deductible?
Generally, no. However, SBLs avoid triggering capital gains from selling investments, which may offer indirect tax advantages.
What happens if my portfolio drops in value during an SBL?
You may face a margin call requiring you to add funds or securities to maintain the loan-to-value ratio. If not addressed, your lender may liquidate assets.
Is a HELOC better if I plan to renovate the property?
Yes, especially if you plan to use the funds for home improvements—interest may be tax-deductible in this case.
Final Thoughts: Tailor Financing to Your Goals
The choice between HELOC and SBL depends on your financial profile, risk tolerance, and long-term goals. A HELOC is ideal for those with strong home equity and steady income. Meanwhile, SBL is a strategic fit for investors wanting quick access to capital without touching real estate assets.
CTA: Considering a mountain property investment? Let our lending experts guide you through your best financing options.
Read Next+
Unlock Your Home Equity with Figure
- 100% online application—no in-person appraisal needed
- Pre-qualify in minutes; funding in as few as 5 days
- Borrow up to $400,000 with flexible terms
- Soft credit check—no impact on your score
