E*TRADE Line of Credit 1.4% APR

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Cucumbers
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E*TRADE Line of Credit 1.4% APR

Post by Cucumbers »

I'm looking for data points on E*TRADE Line of Credit rate...

Their public rates are 2 - 5% APR. I've been exchanging emails for negotiating a better rate and have gotten them down to 1.4%.
Any experience on how often these rates are changed? Fine print says "subject to change at any time".
We're using this for a margin loan for a new house.
nerdymarketer
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Re: E*TRADE Line of Credit 1.4% APR

Post by nerdymarketer »

Very curious on this. I need to borrow a decent some of money for 6-9 months, so looking for a cheap loan source. After that time period, I will have the money to pay it off, so I'm less concerned about the rates shifting under my feet and more focused on finding a good rate from the get-go. Been considering a HELOC, but 1.4% APR sounds amazing.
luckyducky99
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Re: E*TRADE Line of Credit 1.4% APR

Post by luckyducky99 »

Ask where the 1.4 comes from. It’s probably something like LIBOR + x% and will change with LIBOR. As for the x% they can probably change that at will too, but really they won’t unless something crazy happens. It’s there for them to cover themselves in case of unforeseeable weirdness.

Note that a PLOC is not a margin loan. Differences are mostly technical/regulatory but the main one is you can’t buy securities with it.
daniel2000
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Re: E*TRADE Line of Credit 1.4% APR

Post by daniel2000 »

That is a great rate.
I read the rate is tied to 1 month libor https://us.etrade.com/bank/line-of-credit.
If you really wanted you could hedge the rate short Eurodollar futures or buying Eurodollar puts. https://www.cmegroup.com/markets/intere ... ments.html
If rates do not change it costs about 10 basis points to hedge out till June 2022.
Diversification.
nerdymarketer
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Re: E*TRADE Line of Credit 1.4% APR

Post by nerdymarketer »

For that 1.4%, how large of portfolio are you borrowing against? Their published rate chart seems to indicate you'd need eight figures to be getting that kind of rate.
abracadabra11
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Re: E*TRADE Line of Credit 1.4% APR

Post by abracadabra11 »

What company are they matching at that rate? Looks pretty close to IBKR margin rates.
xerxes101
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Re: E*TRADE Line of Credit 1.4% APR

Post by xerxes101 »

I believe you may be able to go lower with IBKR - Pro (depending on how much you are borrowing)
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

Cucumbers wrote: Mon Jul 26, 2021 11:47 pm I'm looking for data points on E*TRADE Line of Credit rate...

Their public rates are 2 - 5% APR. I've been exchanging emails for negotiating a better rate and have gotten them down to 1.4%.
Any experience on how often these rates are changed? Fine print says "subject to change at any time".
We're using this for a margin loan for a new house.
I would be curious to know how big your portfolio is?

The Line Of Credit has a fixed spread that doesn’t change and then a variable portion that is tied to LIBOR. Based on your 1.4% rate I would guess that they are giving you a 1.25% spread which is 0.75% less than their advertised rate of 2% for having greater than 10MM in assets there. I would be very interested to know if you got that rate with less than 10MM in assets there.
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Cucumbers
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Re: E*TRADE Line of Credit 1.4% APR

Post by Cucumbers »

InvestorDave wrote: Tue Jul 27, 2021 7:53 am
Cucumbers wrote: Mon Jul 26, 2021 11:47 pm I'm looking for data points on E*TRADE Line of Credit rate...

Their public rates are 2 - 5% APR. I've been exchanging emails for negotiating a better rate and have gotten them down to 1.4%.
Any experience on how often these rates are changed? Fine print says "subject to change at any time".
We're using this for a margin loan for a new house.
I would be curious to know how big your portfolio is?

The Line Of Credit has a fixed spread that doesn’t change and then a variable portion that is tied to LIBOR. Based on your 1.4% rate I would guess that they are giving you a 1.25% spread which is 0.75% less than their advertised rate of 2% for having greater than 10MM in assets there. I would be very interested to know if you got that rate with less than 10MM in assets there.
Around $2M in brokerage. I just asked if they would match IB and they adjusted the rate
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

Cucumbers wrote: Tue Jul 27, 2021 8:40 am
InvestorDave wrote: Tue Jul 27, 2021 7:53 am
Cucumbers wrote: Mon Jul 26, 2021 11:47 pm I'm looking for data points on E*TRADE Line of Credit rate...

Their public rates are 2 - 5% APR. I've been exchanging emails for negotiating a better rate and have gotten them down to 1.4%.
Any experience on how often these rates are changed? Fine print says "subject to change at any time".
We're using this for a margin loan for a new house.
I would be curious to know how big your portfolio is?

The Line Of Credit has a fixed spread that doesn’t change and then a variable portion that is tied to LIBOR. Based on your 1.4% rate I would guess that they are giving you a 1.25% spread which is 0.75% less than their advertised rate of 2% for having greater than 10MM in assets there. I would be very interested to know if you got that rate with less than 10MM in assets there.
Around $2M in brokerage. I just asked if they would match IB and they adjusted the rate
Just wanting to make sure I understand.

Did you actually open a Line Of Credit (this would show up looking like a separate account on E*TRADE) or did they just match the margin rates?
Topic Author
Cucumbers
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Re: E*TRADE Line of Credit 1.4% APR

Post by Cucumbers »

Yes, line of credit.
Anyone else negotiate a rate on E*TRADE?
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

Cucumbers wrote: Tue Jul 27, 2021 8:58 am Yes, line of credit.
Anyone else negotiate a rate on E*TRADE?
Wow, that’s way better than the rate I have and I have significantly more assets. Guess I’ll be calling up my rep today.
spacecadet610
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Re: E*TRADE Line of Credit 1.4% APR

Post by spacecadet610 »

Interesting.

I asked ETrade to match IB margin loan rates which they did.

How is a line of credit different than a margin loan?
Topic Author
Cucumbers
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Re: E*TRADE Line of Credit 1.4% APR

Post by Cucumbers »

Line of credit cannot be used to purchase securities or repay margin loans. I have no idea how they enforce this…

What rate did you get for E*TRADE margin?
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Re: E*TRADE Line of Credit 1.4% APR

Post by indexfundfan »

Interestingly, I just had a chat with my Etrade rep. He told me rates are negotiable if you have $1m or more assets with them, and that they could even offer fixed rates for say 6 months or a year.
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nerdymarketer
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Re: E*TRADE Line of Credit 1.4% APR

Post by nerdymarketer »

I'm not very familiar with this type of loan product... but being compared to a margin loan scares me.

Does it have the same callable risk as a margin loan?

I'm fine with the rate being variable, but the nice thing about mortgages is they aren't callable. I realize HELOCs are callable, but banks pretty much never do... vs margin loans you hear about a lot more.
spacecadet610
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Re: E*TRADE Line of Credit 1.4% APR

Post by spacecadet610 »

Cucumbers wrote: Tue Jul 27, 2021 10:36 am Line of credit cannot be used to purchase securities or repay margin loans. I have no idea how they enforce this…

What rate did you get for E*TRADE margin?
So it seems a margin loan is better because you can buy securities? Otherwise seems like the risks are the same.

They gave me 1.00% + 1 yr LIBOR rate, so this would be 1.24% now.
Last edited by spacecadet610 on Tue Jul 27, 2021 2:07 pm, edited 2 times in total.
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

spacecadet610 wrote: Tue Jul 27, 2021 10:18 am Interesting.

I asked ETrade to match IB margin loan rates which they did.

How is a line of credit different than a margin loan?
When I look up Interactive Brokers margin rates it shows a rate of 0.75% for a 2MM portfolio so it doesn’t seem like they exactly matched the rate. Am I looking at the wrong page?

https://www.interactivebrokers.com/en/index.php?f=46376
spacecadet610
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Re: E*TRADE Line of Credit 1.4% APR

Post by spacecadet610 »

InvestorDave wrote: Tue Jul 27, 2021 2:03 pm
spacecadet610 wrote: Tue Jul 27, 2021 10:18 am Interesting.

I asked ETrade to match IB margin loan rates which they did.

How is a line of credit different than a margin loan?
When I look up Interactive Brokers margin rates it shows a rate of 0.75% for a 2MM portfolio so it doesn’t seem like they exactly matched the rate. Am I looking at the wrong page?

https://www.interactivebrokers.com/en/index.php?f=46376
That looks right.

Yeah i guess i misspoke. IB did not exactly match the IB rates, as they are tiered.

They gave me a flat rate of 1% + LIBOR, which is better than IB for amounts less than 100k. Otherwise IB would be the better rate.

Still, much better than standard Etrade rates so i was happy.
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

spacecadet610 wrote: Tue Jul 27, 2021 2:10 pm
InvestorDave wrote: Tue Jul 27, 2021 2:03 pm
spacecadet610 wrote: Tue Jul 27, 2021 10:18 am Interesting.

I asked ETrade to match IB margin loan rates which they did.

How is a line of credit different than a margin loan?
When I look up Interactive Brokers margin rates it shows a rate of 0.75% for a 2MM portfolio so it doesn’t seem like they exactly matched the rate. Am I looking at the wrong page?

https://www.interactivebrokers.com/en/index.php?f=46376
That looks right.

Yeah i guess i misspoke. IB did not exactly match the IB rates, as they are tiered.

They gave me a flat rate of 1% + LIBOR, which is better than IB for amounts less than 100k. Otherwise IB would be the better rate.

Still, much better than standard Etrade rates so i was happy.
That's a great rate!
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siamond
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Re: E*TRADE Line of Credit 1.4% APR

Post by siamond »

Cucumbers wrote: Mon Jul 26, 2021 11:47 pm I'm looking for data points on E*TRADE Line of Credit rate...

Their public rates are 2 - 5% APR. I've been exchanging emails for negotiating a better rate and have gotten them down to 1.4%.
Any experience on how often these rates are changed? Fine print says "subject to change at any time".
We're using this for a margin loan for a new house.
InvestorDave wrote: Tue Jul 27, 2021 9:24 am
Cucumbers wrote: Tue Jul 27, 2021 8:58 am Yes, line of credit.
Anyone else negotiate a rate on E*TRADE?
Wow, that’s way better than the rate I have and I have significantly more assets. Guess I’ll be calling up my rep today.
That is a great rate indeed. I am planning to open such a line of credit to deal with the transition of buying a new house before selling the existing one.

Side question: did E*Trade (or the underwriter) run a debt-to-income ratio verification to grant the line of credit? Or did they just assess the securities used as collateral + credit history/score?

I'm asking because most of our income nowadays comes from selling shares from a brokerage account and unfortunately this kind of early retiree situation is not at all acknowledged by regular brokers and their rigid rules... Setting up an auto-withdrawal from a Roth-IRA could mitigate the debt-to-income issue, but it's annoying to undo years of patient Roth conversions...
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

siamond wrote: Tue Jul 27, 2021 3:25 pm
Cucumbers wrote: Mon Jul 26, 2021 11:47 pm I'm looking for data points on E*TRADE Line of Credit rate...

Their public rates are 2 - 5% APR. I've been exchanging emails for negotiating a better rate and have gotten them down to 1.4%.
Any experience on how often these rates are changed? Fine print says "subject to change at any time".
We're using this for a margin loan for a new house.
InvestorDave wrote: Tue Jul 27, 2021 9:24 am
Cucumbers wrote: Tue Jul 27, 2021 8:58 am Yes, line of credit.
Anyone else negotiate a rate on E*TRADE?
Wow, that’s way better than the rate I have and I have significantly more assets. Guess I’ll be calling up my rep today.
That is a great rate indeed. I am planning to open such a line of credit to deal with the transition of buying a new house before selling the existing one.

Side question: did E*Trade (or the underwriter) run a debt-to-income ratio verification to grant the line of credit? Or did they just assess the securities used as collateral + credit history/score?

I'm asking because most of our income nowadays comes from selling shares from a brokerage account and unfortunately this kind of early retiree situation is not at all acknowledged by regular brokers and their rigid rules... Setting up an auto-withdrawal from a Roth-IRA could mitigate the debt-to-income issue, but it's annoying to undo years of patient Roth conversions...
I can provide you with my experience. I currently have a Margin E*Trade account because I dabble in some Options selling. A margin account cannot be used to secure the line of credit so I opened up a second brokerage account that does not have margin enabled. I then transferred a portion of my assets into that non-margin account. My available line of credit is a percentage of the non-margin account balance. I can currently borrow 65% of my non-margin portfolio. I would imagine that this 65% number varies between customers. The other thing that my rep was able to do was to negotiate my rate based on my total holdings in both portfolios, but I've found out through this thread that that rate wasn't exactly so great compared to what others got.

E*Trade did not ask me anything about my debt to income ratio but I do believe they ran a credit report. My current line of credit does not show up at all on my credit reports though. I'm not sure if that's because I haven't taken a draw on the line yet.
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siamond
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Re: E*TRADE Line of Credit 1.4% APR

Post by siamond »

InvestorDave wrote: Tue Jul 27, 2021 3:57 pmE*Trade did not ask me anything about my debt to income ratio but I do believe they ran a credit report.
Thanks, Dave. Just to be sure, E*Trade didn't ask for your current stable income (e.g. wages, dividends in brokerage account, things like that), correct? Nor did they ask for your last tax return (which could be a proxy for income)?
luckyducky99
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Re: E*TRADE Line of Credit 1.4% APR

Post by luckyducky99 »

InvestorDave wrote: Tue Jul 27, 2021 2:03 pm
spacecadet610 wrote: Tue Jul 27, 2021 10:18 am Interesting.

I asked ETrade to match IB margin loan rates which they did.

How is a line of credit different than a margin loan?
When I look up Interactive Brokers margin rates it shows a rate of 0.75% for a 2MM portfolio so it doesn’t seem like they exactly matched the rate. Am I looking at the wrong page?

https://www.interactivebrokers.com/en/index.php?f=46376
The rate you're quoting applies to the size of the loan, not the size of the portfolio. Also, the rates are tiered. So a $2M portfolio would allow for a $1M margin loan, which would have a blended rate of 1.15%. Still pretty low. But the less you borrow, the higher the rate is.
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

siamond wrote: Tue Jul 27, 2021 4:31 pm
InvestorDave wrote: Tue Jul 27, 2021 3:57 pmE*Trade did not ask me anything about my debt to income ratio but I do believe they ran a credit report.
Thanks, Dave. Just to be sure, E*Trade didn't ask for your current stable income (e.g. wages, dividends in brokerage account, things like that), correct? Nor did they ask for your last tax return (which could be a proxy for income)?
It’s possible that I may have had to choose my income when completing the application but I can’t remember for sure. I definitely didn’t have to upload any tax returns though.
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

luckyducky99 wrote: Tue Jul 27, 2021 5:17 pm
InvestorDave wrote: Tue Jul 27, 2021 2:03 pm
spacecadet610 wrote: Tue Jul 27, 2021 10:18 am Interesting.

I asked ETrade to match IB margin loan rates which they did.

How is a line of credit different than a margin loan?
When I look up Interactive Brokers margin rates it shows a rate of 0.75% for a 2MM portfolio so it doesn’t seem like they exactly matched the rate. Am I looking at the wrong page?

https://www.interactivebrokers.com/en/index.php?f=46376
The rate you're quoting applies to the size of the loan, not the size of the portfolio. Also, the rates are tiered. So a $2M portfolio would allow for a $1M margin loan, which would have a blended rate of 1.15%. Still pretty low. But the less you borrow, the higher the rate is.
I didn’t realize the rates were tiered. That makes more sense. Thanks!
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NewMoneyMustBeSmart
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Re: E*TRADE Line of Credit 1.4% APR

Post by NewMoneyMustBeSmart »

Cucumbers wrote: Tue Jul 27, 2021 8:58 am Yes, line of credit.
Anyone else negotiate a rate on E*TRADE?
No, but:

ML - 1.5% (floating)
TD - 1.25%
Schwab - 1.25%

I would not think about using margin for more than 2 years for a home loan/cost - based on my personal belief the feds will hold interest down for 18-30 months before raising.
-- | Few are those who see with their own eyes and feel with their own hearts - Einstein | *Everything I write here is an unreliable opinion*
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Cucumbers
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Re: E*TRADE Line of Credit 1.4% APR

Post by Cucumbers »

Is interest paid on E*TRADE line of credit tax deductible?
calwatch
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Re: E*TRADE Line of Credit 1.4% APR

Post by calwatch »

Cucumbers wrote: Tue Jul 27, 2021 10:45 pm Is interest paid on E*TRADE line of credit tax deductible?
If used to purchase other investments, yes; otherwise, no.
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Cucumbers
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Re: E*TRADE Line of Credit 1.4% APR

Post by Cucumbers »

calwatch wrote: Tue Jul 27, 2021 10:54 pm
Cucumbers wrote: Tue Jul 27, 2021 10:45 pm Is interest paid on E*TRADE line of credit tax deductible?
If used to purchase other investments, yes; otherwise, no.
I thought the one restriction on the line of credit was that it could not be used to purchase other investments?
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

Cucumbers wrote: Tue Jul 27, 2021 11:10 pm
calwatch wrote: Tue Jul 27, 2021 10:54 pm
Cucumbers wrote: Tue Jul 27, 2021 10:45 pm Is interest paid on E*TRADE line of credit tax deductible?
If used to purchase other investments, yes; otherwise, no.
I thought the one restriction on the line of credit was that it could not be used to purchase other investments?
It can not be used to buy securities. It can be used on residential or commercial real estate.
Startled Cat
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Re: E*TRADE Line of Credit 1.4% APR

Post by Startled Cat »

NewMoneyMustBeSmart wrote: Tue Jul 27, 2021 6:30 pm No, but:

ML - 1.5% (floating)
TD - 1.25%
Schwab - 1.25%

I would not think about using margin for more than 2 years for a home loan/cost - based on my personal belief the feds will hold interest down for 18-30 months before raising.
Curious if these quoted rates are margin rates or rates for a line of credit similar to the one discussed at the start of this thread. Also wondering how much in assets it took to secure those rates, and who you reached out to for negotiation.
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Re: E*TRADE Line of Credit 1.4% APR

Post by NewMoneyMustBeSmart »

Startled Cat wrote: Wed Jul 28, 2021 8:22 am
NewMoneyMustBeSmart wrote: Tue Jul 27, 2021 6:30 pm No, but:

ML - 1.5% (floating)
TD - 1.25%
Schwab - 1.25%

I would not think about using margin for more than 2 years for a home loan/cost - based on my personal belief the feds will hold interest down for 18-30 months before raising.
Curious if these quoted rates are margin rates or rates for a line of credit similar to the one discussed at the start of this thread. Also wondering how much in assets it took to secure those rates, and who you reached out to for negotiation.
These are all floating; ML is Libor +; others are FFR+. These are proper simple margin loans (ability) - not pledged asset or LOC.

It took less assets than I thought to get this.
-- | Few are those who see with their own eyes and feel with their own hearts - Einstein | *Everything I write here is an unreliable opinion*
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Cucumbers
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Re: E*TRADE Line of Credit 1.4% APR

Post by Cucumbers »

Other than ability to use funds for securities, any other differences between margin loan and LOC or pledged asset?
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Re: E*TRADE Line of Credit 1.4% APR

Post by RubyTuesday »

Following with interest (pun kind of intended)
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
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Re: E*TRADE Line of Credit 1.4% APR

Post by Dagwood »

Brokers can make non-purpose loans (I.e., not for a permitted purpose like buying securities). It is not a common thing but can be done for high value accounts. Most of the large brokers also have an affiliated bank that could make a loan along the lines of any loan type that is available. While the loans might not be margin loans, I would wonder if the loan is collateralized by the brokerage account. At those rates it would sound as if it is. This gives the broker or bank affiliate recourse against that account, but the liquidation may not be as sudden as would be the case with a margin loan.

Interesting to learn more.

I keep our lending and banking at separate institutions because I view our securities accounts as by far as most valuable asset and would never want a firm having recourse against them absent an individual bankruptcy proceeding.
cashheavy18
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Re: E*TRADE Line of Credit 1.4% APR

Post by cashheavy18 »

I was quoted a rate of 1.65% this week.

ETrade Rep said rate had more to do with requested line of credit amount ($150k) vs. assets.

I've asked them to see if the rate can go down if request a larger line of credit.
InvestorDave
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Re: E*TRADE Line of Credit 1.4% APR

Post by InvestorDave »

I was able to get the spread down on my Line Of Credit from 2.25% to 1.75% after telling them I was going to move assets to Schwab for a better rate. Before I said that my rep told me they couldn't go any lower than 2.25.
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siamond
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Re: E*TRADE Line of Credit 1.4% APR

Post by siamond »

siamond wrote: Tue Jul 27, 2021 3:25 pm[...] I am planning to open such a line of credit to deal with the transition of buying a new house before selling the existing one.

Side question: did E*Trade (or the underwriter) run a debt-to-income ratio verification to grant the line of credit? Or did they just assess the securities used as collateral + credit history/score?

I'm asking because most of our income nowadays comes from selling shares from a brokerage account and unfortunately this kind of early retiree situation is not at all acknowledged by regular brokers and their rigid rules... Setting up an auto-withdrawal from a Roth-IRA could mitigate the debt-to-income issue, but it's annoying to undo years of patient Roth conversions...
After spending some frustrating time speaking with HELOC lenders (who made me roll my eyes with their debt-to-income criteria and the stuff they include in the math; without even speaking of the insane delays for approval -or not-), I gave another call to E*Trade to get a more definitive answer to the issue and ask a couple of other questions.

Luckily, I reached a representative who seemed to truly master the topic. He was very clear that no debt-to-income math will be performed by E*Trade, only a credit score test. The line of credit is secured by the brokerage account as collateral and that's it, nothing more. Also he clarified that there is no underwriter in the process, this is all E*Trade, and approval should come in 24 hours when filling the online application. This was music to my ears, as our early retiree situation (big on savings, not so big on fixed income) is really NOT something regular lenders consider...
abracadabra11
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Re: E*TRADE Line of Credit 1.4% APR

Post by abracadabra11 »

siamond wrote: Thu Aug 05, 2021 12:10 pm
siamond wrote: Tue Jul 27, 2021 3:25 pm[...] I am planning to open such a line of credit to deal with the transition of buying a new house before selling the existing one.

Side question: did E*Trade (or the underwriter) run a debt-to-income ratio verification to grant the line of credit? Or did they just assess the securities used as collateral + credit history/score?

I'm asking because most of our income nowadays comes from selling shares from a brokerage account and unfortunately this kind of early retiree situation is not at all acknowledged by regular brokers and their rigid rules... Setting up an auto-withdrawal from a Roth-IRA could mitigate the debt-to-income issue, but it's annoying to undo years of patient Roth conversions...
After spending some frustrating time speaking with HELOC lenders (who made me roll my eyes with their debt-to-income criteria and the stuff they include in the math; without even speaking of the insane delays for approval -or not-), I gave another call to E*Trade to get a more definitive answer to the issue and ask a couple of other questions.

Luckily, I reached a representative who seemed to truly master the topic. He was very clear that no debt-to-income math will be performed by E*Trade, only a credit score test. The line of credit is secured by the brokerage account as collateral and that's it, nothing more. Also he clarified that there is no underwriter in the process, this is all E*Trade, and approval should come in 24 hours when filling the online application. This was music to my ears, as our early retiree situation (big on savings, not so big on fixed income) is really NOT something regular lenders consider...
What rate were you able to get from Etrade and can you give approximate assets pledged for rate? Recently moved assets to Etrade and am negotiating LOC rate. PM if you don't care to share on thread.
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siamond
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Re: E*TRADE Line of Credit 1.4% APR

Post by siamond »

abracadabra11 wrote: Thu Aug 05, 2021 1:59 pm What rate were you able to get from Etrade and can you give approximate assets pledged for rate? Recently moved assets to Etrade and am negotiating LOC rate. PM if you don't care to share on thread.
I didn't apply yet. Please do share whatever you succeed to negotiate. And I'll do the same when I'm done.
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Re: E*TRADE Line of Credit 1.4% APR

Post by abracadabra11 »

siamond wrote: Thu Aug 05, 2021 3:33 pm
abracadabra11 wrote: Thu Aug 05, 2021 1:59 pm What rate were you able to get from Etrade and can you give approximate assets pledged for rate? Recently moved assets to Etrade and am negotiating LOC rate. PM if you don't care to share on thread.
I didn't apply yet. Please do share whatever you succeed to negotiate. And I'll do the same when I'm done.
:sharebeer
Startled Cat
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Re: E*TRADE Line of Credit 1.4% APR

Post by Startled Cat »

I'm impressed at the success people in this thread reported. So far, I haven't had any luck with Schwab, E*TRADE, or TDAmeritrade.

Filled out the form on Schwab's website to indicate interest in the PAL product. The "regional banking associate" who contacted me said IB margin rates were different from PAL rates, so they could not request a competitive match on that basis.

Sent a secure message to TDAmeritrade expressing interest in moving assets to TD and asking about whether they could match IB margin rates with their line of credit if I moved those assets. I was put in touch with a financial consultant who suggested I move assets first and she could refer me to someone on the banking side to discuss the line of credit and interest rates. She had never heard of anyone negotiating the rate on a line of credit.

Called E*TRADE with the same request. The contact they put me in touch with said it wouldn't make any business sense for them to go significantly below their published rates, and putting in a request would be a waste of time for both of us.

I suspect I'm not talking to the right people.

To provide context, I'm planning to move around $750k of taxable accounts, and I realize I probably won't get an actual match of IB's 1.08% at that level of assets, but I'm hoping for improvement on the published rates.
nerdymarketer
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Re: E*TRADE Line of Credit 1.4% APR

Post by nerdymarketer »

Thanks for the update.

I wonder if you may need to crack 7 figures, as many brokerages have "magic numbers" where suddenly you rise in status... although even then sounds like you're not talking to the right people. Could be that you'd have to move over $1M+, then get assigned a rep, then threaten to leave if they don't lower the rate.

Anyway, watching with interest, as this is something I'm considering in the not too distant future.
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whodidntante
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Re: E*TRADE Line of Credit 1.4% APR

Post by whodidntante »

Startled Cat wrote: Thu Sep 09, 2021 6:36 pm I'm impressed at the success people in this thread reported. So far, I haven't had any luck with Schwab, E*TRADE, or TDAmeritrade.

Filled out the form on Schwab's website to indicate interest in the PAL product. The "regional banking associate" who contacted me said IB margin rates were different from PAL rates, so they could not request a competitive match on that basis.

Sent a secure message to TDAmeritrade expressing interest in moving assets to TD and asking about whether they could match IB margin rates with their line of credit if I moved those assets. I was put in touch with a financial consultant who suggested I move assets first and she could refer me to someone on the banking side to discuss the line of credit and interest rates. She had never heard of anyone negotiating the rate on a line of credit.

Called E*TRADE with the same request. The contact they put me in touch with said it wouldn't make any business sense for them to go significantly below their published rates, and putting in a request would be a waste of time for both of us.

I suspect I'm not talking to the right people.

To provide context, I'm planning to move around $750k of taxable accounts, and I realize I probably won't get an actual match of IB's 1.08% at that level of assets, but I'm hoping for improvement on the published rates.
You could use box spread financing if you don't want to use IB for some reason. That would be much cheaper than IB's rate, and cheaper than any PAL rate that I've heard of. The immediate downside is you have to know what box spread financing is and how to do it. But I've seen threads on that on several financial forums at this point, so the information is out there.

It reminds me of a passage in a favorite book of mine.
"It won't take long to save the money."
"It would take me forever to save the money," I corrected him.
abracadabra11
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Re: E*TRADE Line of Credit 1.4% APR

Post by abracadabra11 »

Startled Cat wrote: Thu Sep 09, 2021 6:36 pm Called E*TRADE with the same request. The contact they put me in touch with said it wouldn't make any business sense for them to go significantly below their published rates, and putting in a request would be a waste of time for both of us.
E-Trade seems to refer to this as both a Special Pricing Request and/or a Negotiation Request. And as noted in the OP, they do go well below their published rates.
J295
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Re: E*TRADE Line of Credit 1.4% APR

Post by J295 »

Startled Cat wrote: Thu Sep 09, 2021 6:36 pm I'm impressed at the success people in this thread reported. So far, I haven't had any luck with Schwab, E*TRADE, or TDAmeritrade.

Filled out the form on Schwab's website to indicate interest in the PAL product. The "regional banking associate" who contacted me said IB margin rates were different from PAL rates, so they could not request a competitive match on that basis.

Sent a secure message to TDAmeritrade expressing interest in moving assets to TD and asking about whether they could match IB margin rates with their line of credit if I moved those assets. I was put in touch with a financial consultant who suggested I move assets first and she could refer me to someone on the banking side to discuss the line of credit and interest rates. She had never heard of anyone negotiating the rate on a line of credit.

Called E*TRADE with the same request. The contact they put me in touch with said it wouldn't make any business sense for them to go significantly below their published rates, and putting in a request would be a waste of time for both of us.

I suspect I'm not talking to the right people.

To provide context, I'm planning to move around $750k of taxable accounts, and I realize I probably won't get an actual match of IB's 1.08% at that level of assets, but I'm hoping for improvement on the published rates.
Is there a better process to employ to have success? I’m helping one of our children who is looking to borrow $200K on a line with a $500k account. Wondering if he can obtain a favorable rate? Also wondering if we also moved over seven figures in securities to the same brokerage it’s part of the negotiations whether that might help him obtain a favorable rate?
gougou
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Re: E*TRADE Line of Credit 1.4% APR

Post by gougou »

Just get a portfolio margin account and sell SPX Box Spread for 0.5% to 0.6% APR. You get to fix the 0.6% APR until Jan 2023 whereas a Line of Credit is subject to interest rate changes daily. You also get short term capital loss instead of investment interest expense from box spread which is easily deductible and can be easily carried forward.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
harikaried
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Re: E*TRADE Line of Credit 1.4% APR

Post by harikaried »

Does anyone know if having assets in IRA/401k accounts helps in getting better rates? I know those retirement accounts can't be used to borrow for these types of loans, but maybe "total assets" is something considered as it does affect service levels at some places.
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indexfundfan
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Re: E*TRADE Line of Credit 1.4% APR

Post by indexfundfan »

For those with this line of credit, how does it work?

After you pledge a brokerage account, can you still trade in that account?

How do you get money from the line of credit? Do you request an online request to have money transferred into your bank account? How do you repay your loan?

Thank you.
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