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HELOC vs. Margin
Old 10-19-2016, 01:21 PM   #1
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HELOC vs. Margin

I see some folks on here suggesting getting a HELOC before FIRE.
What about margin? The interest rate is very low on margin ( I think about 1.5% on my account right now) and there is no annual fee. If you are only going to tap into one or the other only in case of an emergency or an opportunity, why would you pay the annual fee for the HELOC. Educate me here.

Edit, I just checked and the rates start closer to 4% and can go as high as 9% for small loans. So that enters into the equation, but that is still better than using a credit card and no annual fee like the HELOC.
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Old 10-19-2016, 01:40 PM   #2
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I dunno.

I have a fat line of credit secured by my investments and it costs nothing.
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Old 10-19-2016, 02:07 PM   #3
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Our HELOC has zero yearly fees. The reason to do it while still working is your debt to income ratio generally supports less credit then while you are w*rking.
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Old 10-19-2016, 02:27 PM   #4
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Quote:
Originally Posted by COcheesehead View Post
I see some folks on here suggesting getting a HELOC before FIRE.
What about margin? The interest rate is very low on margin ( I think about 1.5% on my account right now) and there is no annual fee. If you are only going to tap into one or the other only in case of an emergency or an opportunity, why would you pay the annual fee for the HELOC. Educate me here.

Edit, I just checked and the rates start closer to 4% and can go as high as 9% for small loans. So that enters into the equation, but that is still better than using a credit card and no annual fee like the HELOC.

HELOC is much cheaper than margin for me

My current HELOC rate (1-250k): 3.3% no annual fee

FIDO Margin: Fidelity's current Base Margin Rate, effective since 01/12/09, is 6.575%.
Debit balance Margin rate Effective rate
$100,000–$499,999 Base 6.575%
$50,000–$99,999 Base + 0.50% 7.075%
$25,000–$49,999 Base + 1.00% 7.575%
$10,000–$24,999 Base + 1.50% 8.075%
3.75% rate available for debt balances over $500,000
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Old 10-19-2016, 02:39 PM   #5
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I think you want both. Options. Flexibility.
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Old 10-19-2016, 02:43 PM   #6
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I think you want both. Options. Flexibility.
That almost seems like a belt, suspenders and duct tape approach. Double, extra assured.
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Old 10-19-2016, 02:55 PM   #7
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Originally Posted by Montecfo View Post
I think you want both. Options. Flexibility.

+1
They don't look at income for a margin account do they? HEL//HELOC can go higher LTV, I think.
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Old 10-19-2016, 11:40 PM   #8
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Do both.

My HELOC has no annual fee, so I keep it just in case.
I suppose I could also borrow via margin.
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