Buying in Israel: borrowing against a portfolio instead of selling it.
If you are making Aliya and need a large sum, such as a down payment on a home in Israel, a securities-based loan from the brokerage that holds your account can let you stay invested and defer capital gains, though a market drop can force sales. Aliya Financial does not make the loan.
Book a Free ConsultationHow It Works
1. Review your situation
We start with a free consultation to understand your goals, your timeline, and the investments you hold in eligible U.S. brokerage accounts. The consultation is educational. Any loan is between you and the custodian.
2. Check eligibility with the custodian
The brokerage firm that holds your account decides which securities may be borrowed against and how much credit may be available, based on its own lending criteria.
3. Access funds if approved
If the custodian approves a line of credit, you may draw funds from that lender as needed, for example toward a purchase in Israel, while your portfolio generally stays invested. Approval and funding are the custodian's decisions, not Aliya Financial's.
4. Plan for repayment
Interest accrues on the amount you borrow at a variable rate set by the lender. We can help you think through how a loan would fit your overall financial picture. We do not set the rate, service the loan, or arrange repayment with the lender.
These are general illustrations, not a recommendation about your situation.
Who It May Fit
- People planning Aliya who need a significant sum for a defined, shorter-term purpose, such as a down payment on a home in Israel.
- Investors with a diversified, taxable brokerage portfolio who would prefer not to sell appreciated holdings.
- People with a clear plan and an expected source of funds to repay the loan.
- Those who are comfortable with market fluctuations and able to add funds if the lender requires it.
Who It May Not Fit
- People who need the money long term with no clear plan to repay it.
- Investors with concentrated or highly volatile portfolios.
- Anyone with a low tolerance for risk or for market declines.
- Assets held mainly in retirement accounts, such as IRAs or 401(k)s, which generally are not eligible to be pledged as collateral.
- Anyone who could not meet a margin call by adding funds on short notice.
Understand the Risks
Borrowing against securities carries risk and is not suitable for all investors. Before deciding, please consider the following:
- A market decline can trigger a margin call. If the value of the securities in your account falls, the lender may require you to deposit additional funds or securities, or may sell some or all of your securities to cover the loan.
- Securities may be sold without notice and at a loss. The lender may be able to sell your securities without contacting you first, and you may not be able to choose which securities are sold. A forced sale can realize the capital gains taxes that borrowing was meant to defer, and it may create taxable gains or losses.
- Interest rates are variable. The rate on the loan can change over time, which may increase your cost of borrowing.
- You can lose more than you deposit. If the value of your collateral falls far enough, you may owe the lender more than the value of the securities in your account.
- Currency risk on a dollar loan for a shekel purchase. If you borrow in U.S. dollars to fund a purchase priced in Israeli shekels, a move in the dollar-shekel rate can change what the loan costs you in shekels, or what a shekel asset is worth against the dollar debt. Currency moves can reverse.
- Israeli lenders may treat the loan as debt. If you use borrowed funds toward a purchase in Israel, an Israeli lender may ask about the source of your down payment and may count the U.S. portfolio loan as existing debt when it underwrites a mortgage. Aliya Financial does not arrange Israeli mortgages and is not a mortgage broker.
- Not suitable for all investors. Whether borrowing against securities is appropriate depends on your full financial situation, goals, and risk tolerance.
Who Makes the Loan
Loans are made and serviced by the brokerage firm or custodian that holds your account, not by Aliya Financial, LLC. Aliya Financial does not lend money, does not arrange loans or mortgages, and is not a mortgage broker. Aliya Financial receives no compensation from the custodian for these loans. Loan approval, terms, interest rates, and collateral requirements are determined solely by the lender.
Aliya Financial's advisory fee is up to 1% a year, charged on the full value of the holdings in your account, not reduced by any loan balance. That means if you borrow against your portfolio, you pay the advisory fee on assets that are supporting a loan. For example, on a $500,000 portfolio with a $100,000 loan, the fee is figured on $500,000, not $400,000, which is about $1,000 a year more than if it were figured net of the loan. Borrowing instead of selling also keeps assets in the account, so the firm continues to earn that fee: keeping about $200,000 invested at 1% means about $2,000 a year in advisory fees. These are conflicts of interest, and we will discuss them with you before you decide. You don't need an adviser to borrow against a portfolio; brokerages offer these loans directly. Aliya Financial is fee-based, not fee-only: insurance and annuities are offered separately and pay commissions.
Aliya Financial is based in the United States and is not licensed in Israel. It does not give Israeli tax, legal, or mortgage advice.
Not Tax or Legal Advice
This page is for educational purposes only and is not tax or legal advice. U.S. citizens owe U.S. tax on worldwide income wherever they live. The tax treatment of borrowing, loan interest, and any future sale of securities depends on your individual circumstances and may differ between the United States and Israel. Please consult a qualified U.S. and, if needed, Israeli tax professional before making a decision.
Book a Free Consultation
A free conversation about whether borrowing against your portfolio may make sense for your situation.
Educational only, not individual tax, legal, or investment advice. Aliya Financial, LLC is an investment adviser registered in New Jersey; registration does not imply a certain level of skill or training. Insurance is offered separately through a licensed agent and pays commissions. Aliya Financial is based in the United States and is not licensed in Israel.