Is a pledged asset line (PAL) a good decision for me?
Hey guys,
I currently have a 15 year mortgage at 5% for 120k. I have ~500k in my stock portfolio, and I've always thought about doing the whole coast FIRE thing. My ammortization calculator tells me I'll be paying $60k in interest over the course of the loan and of course I want to minimize that as much as possible. I didn't purchase the home outright in the beginning because I figured the money would do better in the market (house is 180k, I put down 60k because anything beyond that point wouldn't get me a better rate).
I was thinking about selling my long term holdings and paying off the loan, but then I'd have to pay long term capital gains and it'll also push me into a higher tax bracket (salary at the moment is ~150k). In googling more efficient ways to pay off the loan, I came across pledged asset lines (PAL) and at face value it sounds like a smart move for me. I haven't gotten quotes yet but I imagine the interest on the PAL would be less than that of my mortgage.
More financial details:
- Age: 35
- Salary: $150k (thinking about coast FIRE before 40)
- Brokerage account: $500k (basically all VOO)
- Emergency Fund (HYSA): $30k
- 401k: $120k
- Debt: Only the mortgage
- Credit Scores: >800
Would love some thoughts and feedback, thanks!