Technical refinancing
- Family & Lifestyle
- Article
An approach to property purchase that puts time on your side.
Timing is everything.
It’s an enduring idea with broad applications, from professional to personal, and one that seems particularly apt when it comes to real estate. Once you’ve found the perfect place, having time on your side could be what makes it yours.
Moving quickly in the housing market requires awareness, flexibility and, more often than not, cash. Though it seems the US has entered a relative cooling period, 2024’s more competitive environment saw all-cash purchases surge to a 10-year high of 32%, according to the National Association of Realtors.
But even in taking a cash approach, designed to appeal to sellers by streamlining the process, buyers have the opportunity to maximize efficiency for themselves.
Technical refinance is a strategy that enables buyers to marry the expediency of cash with the flexibility of financing by using a securities based line of credit (SBL) to generate liquidity quickly, then a suitable mortgage product to pay it back thereafter.
“The seller only sees that you’re making a cash offer, which typically brings you to the front of the line,” says Melissa Noto, a vice president of product management with Raymond James Bank whose work focuses on the SBL side of the equation. “Then you can choose the mortgage product and timing that’s most beneficial. That’s the crux of it, making time work for you in both directions.”
How it works
While there is naturally some nuance to the process case by case, a textbook technical refinance proceeds like this:
- A buyer works with their financial advisor and a bank to open a securities based line of credit.
- Funds from the SBL are withdrawn and placed into the buyer’s bank account.
- The buyer is then able to make their offer, with cash signaling the ability to close quickly and potentially resulting in a more attractive purchase price.
- After an offer is accepted, proof of funds is supplied by the bank and the sale moves forward.
- With the property purchased, the buyer can then take their time finding the right product and/or waiting for a favorable interest rate environment to secure a mortgage, use the loan to pay off the SBL, and begin making repayments.
Sharing the wealth
Because this strategy uses SBLs – products that borrow against an investment portfolio without liquidating its assets – it is particularly suited to situations where a person with more established finances wants to extend that stability to someone else.
For example, a parent could leverage their SBL borrowing power – and avoid the limitations of traditional gifting (typically capped in the tens of thousands each year) – to help purchase a child’s first home, potentially without interrupting their own long-term financial plans.
This is an especially pertinent application in today’s housing climate, with median home prices still near historic highs and younger generations facing an uphill climb in most markets.
“The process is the same,” says Melissa, “just in someone else’s name.” Parents could even have their child take on the mortgage payments once the refinance is complete.
Thinking outside the home
Residential purchases – from primary to vacation – tend to be the typical use case for technical refinance, but they are far from the only.
Those pursuing business ventures can also use the approach to secure offices, commercial and manufacturing buildings, retail space, investment properties and more.
“The mortgage process is a little different in the commercial context, but it’s the same conceptually,” says Jennifer Beneda, who focuses on the mortgage side of things as a director of mortgage products with Raymond James Bank.
And pushing expectation a little further, technical refinance can also be employed to fund repairs or restoration in the wake of a natural disaster. According to Jennifer, residents who own a damaged property free and clear can use this option in much the same way as purchasers.
Ultimately, technical refinancing is an approach to purchasing property that can help you use time in your favor. “In highly competitive markets especially, but really in any market, this approach is worth considering,” says Jennifer. “It’s a strong option for meeting needs, quickly, efficiently and with minimal pain points.”
A Securities Based Line of Credit (SBLC) may not be suitable for all clients. The proceeds from an SBLC cannot be (a) used to purchase or carry securities; (b) deposited into a Raymond James investment or trust account; (c) used to purchase any product issued or brokered through an affiliate of Raymond James, including insurance; or (d) otherwise used for the benefit of, or transferred to, an affiliate of Raymond James. Raymond James Bank does not accept RJF stock or any securities issued by affiliates of Raymond James Financial as pledged securities towards an SBLC. Borrowing on securities based lending products and using securities as collateral may involve a high degree of risk including unintended tax consequences and the possible need to sell your holdings, which may lead to a significant impact on long-term investment goals. Market conditions can magnify any potential for loss. If the market turns against the client, he or she may be required to quickly deposit additional securities and/or cash in the account(s) or pay down the loan to avoid liquidation. The securities in the Pledged Account(s) may be sold to meet the Collateral Call, and the firm can sell the client’s securities without contacting them. A client is not entitled to choose which securities or other assets in his or her account are liquidated or sold to meet a Collateral Call. The firm can increase its maintenance requirements at any time and is not required to provide a client advance written notice. A client is not entitled to an extension of time on a Collateral Call. Increased interest rates could also affect SOFR rates (or any successor rate thereto) that apply to your SBLC causing the cost of the credit line to increase significantly. The interest rates charged are determined by the market value of pledged assets and the net value of the client’s non-pledged Capital Access account.
Securities Based Line of Credit provided by Raymond James Bank. Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. are affiliated with Raymond James Bank, member FDIC.
Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value. © 2025 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. © 2025 Raymond James Financial Services, Inc., member FINRA/SIPC. Raymond James is a registered trademark of Raymond James Financial, Inc.
