Schwab's strategies for tapping assets include the margin loan, SBLOC, or HELOC

Your investment portfolio and your home are probably the two largest assets you own, and most people never consider borrowing against either one. The Schwab Center for Financial Research wants to change that thinking by laying out three distinct ways to turn those assets into a source of credit.

Each option offers interest rates well below what you would pay on a credit card or personal loan, and each comes with trade-offs that could put your holdings at risk if you borrow without a clear repayment plan. The more assets you own, the more borrowing solutions you may have at your disposal, the firm noted.

Schwab outlines 3 ways to borrow against your assets

The three tools Schwab outlines are margin loans, securities-based lines of credit, and home equity lines of credit, and the differences between them matter more than most borrowers realize.

1. Margin loans

A margin loan lets your brokerage lend you money against eligible stocks, bonds, ETFs, and mutual funds in your account, Schwab's research team explained.

The minimum requirement is typically $2,000 in cash or marginable securities, and borrowing limits generally cap at 50% of the portfolio's value. Interest rates tend to be lower than unsecured options like credit cards because your securities serve as collateral.

Investors commonly use margin for two purposes, the report noted: buying additional securities when cash is not immediately available and covering short-term expenses such as a large tax bill or an unexpected cost.

A margin call would require additional capital to be put in the account, or the brokerage house might need to sell securities at what could be an inopportune time.

There is no lengthy application process, making it a ready source of credit that can be tapped and replenished like any other line of credit, the firm said. Margin interest may also be tax-deductible when the borrowed funds generate taxable income, though Schwab recommended consulting a tax advisor.

The risk is the maintenance call, which is triggered when your account's value drops below the required minimum after you have already drawn funds. Your brokerage can then require you to deposit additional funds or marginable securities, or sell assets in your account to cover the shortfall.

2. Securities-based lines of credit

The second option is a securities-based line of credit, or SBLOC, offered through a bank rather than the brokerage itself. An SBLOC lets you borrow against the value of your portfolio at variable interest rates that are typically lower than margin rates, Schwab's team explained.

Assets are pledged as collateral and held in a separate brokerage account, and many lenders require a minimum pledge of $100,000 to qualify. The primary appeal is that borrowing against your investments, rather than selling them, can help you avoid triggering capital gains taxes and keep your investment strategy intact, the firm noted.

Common uses include bridging two financial transactions, smoothing uneven cash flow throughout the year, or funding business equipment and inventory purchases. Schwab's own-branded version, the Pledged Asset Line, requires a minimum credit facility of $100,000 secured by eligible collateral.

The risk profile mirrors margin in important ways, the report cautioned, because SBLOCs are demand loans that the bank can call at any time. If the market value of your pledged collateral decreases, the bank could demand immediate repayment or require you to deposit additional cash or securities to avoid a forced sale.

3. A home equity line of credit

Schwab's third option is the home equity line of credit (HELOC), a revolving line of credit collateralized by your home equity. A HELOC generally has a 30-year term consisting of a 10-year draw period, during which you make scheduled interest payments and can optionally pay down principal.

HELOCs are especially well-suited for home improvements, where homeowners who itemize deductions may deduct the loan interest on combined mortgage debt for 2025 and 2026 under current tax law, up to a total combined mortgage debt of $750,000, but only if the funds are used to buy, build, or improve the home securing the HELOC, Schwab noted.

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The firm also highlighted HELOCs as a backup for an emergency fund, a bridge for major purchases like a vehicle or wedding, and a tool for consolidating high-interest credit card debt at a lower rate. The trade-off is that your home is on the line, which raises the stakes beyond what margin or SBLOC borrowers face for their portfolios.

Failure to make the agreed payments may give the lender the right to begin foreclosure, the report warned, so a solid payoff strategy is essential before opening the line. Lenders also need time to process a HELOC application because it requires a home appraisal and credit check, which can take weeks, the firm added.

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How Schwab's 3 asset-backed borrowing options compare

Schwab shares three asset-backed borrowing options for investors, and here are the key differences across these options.

Key differences across Schwab's 3 lending products

• Margin loans require just $2,000 in eligible securities with no upfront fees, allow borrowing up to 50% of portfolio value, and can be used for any lawful purpose, including purchasing additional securities, Schwab noted.
• SBLOCs typically allow borrowing up to 70% of pledged collateral value with no origination fees, but proceeds cannot be used to purchase securities or repay margin loans, and many lenders require $100,000 in eligible assets, the report explained.
• HELOCs carry origination fees and closing costs that the other two products do not, but they offer a structured 10-year draw and 20-year repayment period and can be used for nearly any purpose, including debt consolidation and home improvements, the firm said.
• Maintenance risk applies to both margin loans and SBLOCs, where a decline in portfolio value can force you to deposit additional funds or face a liquidation of pledged assets, while HELOCs carry foreclosure risk if payments are missed, Schwab warned.

Schwab says every asset-backed loan needs a clear endgame

Schwab's overview highlights how borrowing against investments or home equity has become a more common liquidity strategy for households with significant assets. Margin loans, securities-based lines of credit, and HELOCs each offer access to cash without immediately selling investments or property.

The firm's comparison underscores that lower borrowing costs often entail higher collateral risk, whether through forced liquidation, margin calls, or foreclosure exposure.

Ultimately, the report frames asset-backed lending less as easy money and more as a financial tool that requires careful consideration of repayment timing, market volatility, and the long-term impact on accumulated wealth.

Related: Schwab explains why a cheap-looking stock could be a trap

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This story was originally published May 14, 2026 at 7:07 AM.