Large Personal Line of Credit

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AustinAttorney
Posts: 15
Joined: Fri Feb 24, 2017 10:16 am

Large Personal Line of Credit

Post by AustinAttorney »

All -

For numerous years, I've had an annually-renewable $500,000 personal unsecured line of credit through BBVA, which provided for a rate of prime (currently 3.25% I think) and interest-only monthly payments. BBVA also allowed me to tie the LOC to a BBVA checking account having no minimum balance requirements and no service fees.

With the somewhat recent PNC takeover of BBVA, I see a high likelihood of this program going away, and even if PNC does continue to offer personal lines of credit, I imagine it won't be as good -- either higher rates or lower lines of credit. In addition, in some transition documents I've received from PNC, they're going to waive service fees on checking accounts for now, but are moving to a regime in which I'd need to tie up sufficient cash to avoid monthly service fees during 2022.

My current LOC with BBVA will mature in early February, and I'd like to start looking into other options.

Income is $1.25M annually, the majority of which is distributed to me by my firm within two weeks after the end of the calendar year when earned. So, this LOC provides a little liquidity that is helpful given my irregular receipt of income, and given that I am obligated to pay quarterly estimated taxes in which estimated payments often consume most of the non-lump sum distributions I receive during the year. Also, we've currently been building a house and then LOC also provides some liquidity until construction is finished and we can move out of and sell the current home and get the cash out of it (to stave off questions, we do have a HELOC for the current home with a $0 balance because the rate is 0.75% higher than the unsecured LOC).

Any of y'all have knowledge of or experience with other banks with similar unsecured LOC programs, particularly those accessible to customers in Central Texas?

Thanks in advance for any advice.

-AustinAttorney
Grt2bOutdoors
Posts: 25617
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Large Personal Line of Credit

Post by Grt2bOutdoors »

Have you inquired with Frost Bank? Their website indicated they offer both unsecured and secured personal lines of credit. A line of your size is currently Prime (WSJ) with a spread of 0%. Current rate is 3.25%.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
bsteiner
Posts: 9151
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Large Personal Line of Credit

Post by bsteiner »

Many banks offer this.
jarjarM
Posts: 2502
Joined: Mon Jul 16, 2018 1:21 pm

Re: Large Personal Line of Credit

Post by jarjarM »

Does it have to be a LOC? IF you have sufficient assets in one of the brokerage firm, they offer pledged asset loan (PAL) that you can utilize for liquidity reason. Schwab offers one and with some negotiation, several posters have been able to get it to 1.2-1.3% range.
Grt2bOutdoors
Posts: 25617
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Large Personal Line of Credit

Post by Grt2bOutdoors »

jarjarM wrote: Tue Sep 21, 2021 12:28 pm Does it have to be a LOC? IF you have sufficient assets in one of the brokerage firm, they offer pledged asset loan (PAL) that you can utilize for liquidity reason. Schwab offers one and with some negotiation, several posters have been able to get it to 1.2-1.3% range.
I think the objective the OP is seeking to avoid providing a perfected security interest in his assets, being cash and/or securities. He wants an unsecured credit line underwritten on basis of income and assets but without the handcuffs on them. A PAL is fully collateralized and maintained in the control of lending broker, it’s pretty much a very low to no risk loan on part of lender.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
jarjarM
Posts: 2502
Joined: Mon Jul 16, 2018 1:21 pm

Re: Large Personal Line of Credit

Post by jarjarM »

Grt2bOutdoors wrote: Tue Sep 21, 2021 2:23 pm
jarjarM wrote: Tue Sep 21, 2021 12:28 pm Does it have to be a LOC? IF you have sufficient assets in one of the brokerage firm, they offer pledged asset loan (PAL) that you can utilize for liquidity reason. Schwab offers one and with some negotiation, several posters have been able to get it to 1.2-1.3% range.
I think the objective the OP is seeking to avoid providing a perfected security interest in his assets, being cash and/or securities. He wants an unsecured credit line underwritten on basis of income and assets but without the handcuffs on them. A PAL is fully collateralized and maintained in the control of lending broker, it’s pretty much a very low to no risk loan on part of lender.
Ah I see, thanks.
Count of Notre Dame
Posts: 447
Joined: Fri Oct 11, 2013 1:08 pm

Re: Large Personal Line of Credit

Post by Count of Notre Dame »

AustinAttorney wrote: Tue Sep 21, 2021 11:34 am All -

For numerous years, I've had an annually-renewable $500,000 personal unsecured line of credit through BBVA, which provided for a rate of prime (currently 3.25% I think) and interest-only monthly payments. BBVA also allowed me to tie the LOC to a BBVA checking account having no minimum balance requirements and no service fees.

With the somewhat recent PNC takeover of BBVA, I see a high likelihood of this program going away, and even if PNC does continue to offer personal lines of credit, I imagine it won't be as good -- either higher rates or lower lines of credit. In addition, in some transition documents I've received from PNC, they're going to waive service fees on checking accounts for now, but are moving to a regime in which I'd need to tie up sufficient cash to avoid monthly service fees during 2022.

My current LOC with BBVA will mature in early February, and I'd like to start looking into other options.

Income is $1.25M annually, the majority of which is distributed to me by my firm within two weeks after the end of the calendar year when earned. So, this LOC provides a little liquidity that is helpful given my irregular receipt of income, and given that I am obligated to pay quarterly estimated taxes in which estimated payments often consume most of the non-lump sum distributions I receive during the year. Also, we've currently been building a house and then LOC also provides some liquidity until construction is finished and we can move out of and sell the current home and get the cash out of it (to stave off questions, we do have a HELOC for the current home with a $0 balance because the rate is 0.75% higher than the unsecured LOC).

Any of y'all have knowledge of or experience with other banks with similar unsecured LOC programs, particularly those accessible to customers in Central Texas?

Thanks in advance for any advice.

-AustinAttorney
I bank with First Republic (San Francisco headquarters but I've never had to go into a physical bank). The PLOC is $100k at 3.5%, amortizes after two years or has to be renewed if $0 balance. First Republic "requires" you to maintain a minimum cash balance $15-20k I believe, although I keep $40k in my checking account at the end of each month anyway.

I used to have BBVA Compass's Starline which was a pretty great product, although being renewable every single year I eventually lost it when I happened to be changing my primary home (and temporarily owned two houses) which I thought was a bit ridiculous. Looks like I qualify for a $260k HELOC with BofA @ 4%, at that rate I'd be hesitant to use it.
Count of Notre Dame
Posts: 447
Joined: Fri Oct 11, 2013 1:08 pm

Re: Large Personal Line of Credit

Post by Count of Notre Dame »

AustinAttorney wrote: Tue Sep 21, 2021 11:34 am All -

For numerous years, I've had an annually-renewable $500,000 personal unsecured line of credit through BBVA, which provided for a rate of prime (currently 3.25% I think) and interest-only monthly payments. BBVA also allowed me to tie the LOC to a BBVA checking account having no minimum balance requirements and no service fees.

With the somewhat recent PNC takeover of BBVA, I see a high likelihood of this program going away, and even if PNC does continue to offer personal lines of credit, I imagine it won't be as good -- either higher rates or lower lines of credit. In addition, in some transition documents I've received from PNC, they're going to waive service fees on checking accounts for now, but are moving to a regime in which I'd need to tie up sufficient cash to avoid monthly service fees during 2022.

My current LOC with BBVA will mature in early February, and I'd like to start looking into other options.

Income is $1.25M annually, the majority of which is distributed to me by my firm within two weeks after the end of the calendar year when earned. So, this LOC provides a little liquidity that is helpful given my irregular receipt of income, and given that I am obligated to pay quarterly estimated taxes in which estimated payments often consume most of the non-lump sum distributions I receive during the year. Also, we've currently been building a house and then LOC also provides some liquidity until construction is finished and we can move out of and sell the current home and get the cash out of it (to stave off questions, we do have a HELOC for the current home with a $0 balance because the rate is 0.75% higher than the unsecured LOC).

Any of y'all have knowledge of or experience with other banks with similar unsecured LOC programs, particularly those accessible to customers in Central Texas?

Thanks in advance for any advice.

-AustinAttorney
What did you end up doing?
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