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Refinancing using SyntheticFi
See how you can leverage SyntheticFi's various lending options to refinance various existing loans, from HELOC to vehicle loans.
Joseph Wang
Apr 29, 2025
Key Takeaways
SyntheticFi loans provide the following key benefits when it comes to refinancing other debt:
Low Interest Rates: Significantly cheaper than other forms of secured debt like HELOCs, vehicle loans, traditional securities-backed loans by 2%+.
Tax-Advantaged: Interest is tax-deductible against capital gains with no cap (mortgages and HELOC limit deductions at $750K).
Flexible Repayment: SyntheticFi supports different borrowing options to support how you want to repay.
Broadly Accessible: No income or credit verification; loans are based on portfolio equity alone.
Some common ways of using SyntheticFi to refinance an existing loan:
HELOC: Cut interest from 8% to as low as 4%, saving thousands yearly and unlocking new tax deductions.
Business Loan: Replace high-interest loans (~15%) with fixed-rate options with lump sum repayment at expiration, preserving your business cash flow.
Vehicle Loan: Swap rigid payments with flexible options, useful for self-employed or variable-income earners.
Personal Loan: Turn costly unsecured loans (10–20%) into low-interest, collateral-backed loans, easing budget strain.
What is Refinancing
Refinancing involves replacing an existing loan with a new one, typically to secure better terms, such as a lower interest rate, reduced monthly payments, or a different loan structure. We see clients refinance to save money, improve cash flow, or align loan terms with their financial goals. For example, refinancing a high-interest loan with a lower-rate option can reduce total borrowing costs, while switching to an interest-only loan can free up monthly cash for other investments. SyntheticFi enables refinancing by leveraging your investment portfolio as collateral, offering lower rates and unique tax advantages compared to traditional refinancing options. Lets walk through a few common examples of refinancing, and how SyntheticFi could help reduce costs and manage debt more easily.
Why Choose SyntheticFi
SyntheticFi leverages your investment portfolio to provide a flexible and cost-effective refinancing alternative to traditional loans, potentially saving you a lot of money. By borrowing against securities without selling them, SyntheticFi's lending program offers the following key benefits:
Low Interest Rate: SyntheticFi provides loans with interest rates as low as 4%, a substantial reduction compared to other forms of collateralized debt like HELOCs (8%), vehicle loans (7%-12%), and other securities-backed loans (6%+). Borrowers tend to refinance when there's a 1% gap in the interest rate for the new loan; SyntheticFi is often cheaper by 2%+.
Tax-Advantaged: Interest costs on SyntheticFi loans can be claimed as capital losses under IRS rules. This is particularly advantageous if you have a large investment portfolio, as the interest can offset taxable capital gains from investment sales. Furthermore, unlike traditional mortgages and HELOCs, which cap interest deductions at $750K, there's no cap on deducting SyntheticFi loan interest.
Flexible Repayment: We offer both floating-rate and fixed-rate borrowing options, each supporting flexible payment structures:
Floating-Rate: These are equivalent to a line of credit so you can freely pay down, or draw more, debt whenever you want (as long as your portfolio maintains sufficient collateral). e.g. You can choose to make interest-only payments during the draw period, similar to a HELOC. This reduces monthly cash flow demands, making it easier to manage finances.
Fixed-Rate: These are structured as balloon loans, where no principal or interest payments are required during the term, with the full amount due at maturity. So you can preserve cash flow for other purposes in the interim.
Broadly Accessible: SyntheticFi is suitable for diverse clients, including those with unconventional income or high debt-to-income ratios. As long as you have an investment portfolio that can be used as collateral for borrowing, you're eligible.
As a final note, SyntheticFi allows you to borrow against your securities without selling them. This is crucial for avoiding capital gains taxes, which could be triggered if you sold appreciated assets. Also, by staying fully invested in the market, you continue to build your wealth.
HELOC
A Home Equity Line of Credit (HELOC) is a loan that allows homeowners to borrow against the equity in their home, often used for home improvements or other major expenses. HELOCs typically carry variable interest rates, averaging around 8% in 2025, which can increase monthly payments if rates rise. Refinancing a HELOC with SyntheticFi can lower borrowing costs and provide additional tax benefits.
Sarah, a senior software engineer in Palo Alto, has a $300K HELOC at 8% to fund a home renovation. Her monthly interest payment is $2K which is putting a strain on her cash flow, given her child care expenses. With a $2MM investment portfolio, she refinances the HELOC with a SyntheticFi floating-rate loan at 4%. Her monthly interest drops to $1K, saving her $12K annually. If her liquidity issues were temporary, Sarah could even choose to delay the interest payments, absorbing into the principal.
Furthermore, before refinancing, Sarah could not claim any tax relief on the interest payments on her HELOC. With a $1MM outstanding mortgage on her home, she was already deducting the mortgage interest against the $750K cap on qualified home mortgage debt. But the tax interest on the SyntheticFi loan is tax-deductible as a capital loss, with no cap. So with a $12K deduction, Sarah might be able to save an extra ~$2.9K in taxes. (This article explains the tax treatment for SyntheticFi loans.)
Core Considerations | Why SyntheticFi |
|---|---|
Cost of borrowing | Low Interest Rate: HELOCs typically have rates averaging 8% (in 2025). SyntheticFi offers interest rates as low as ~4%. |
Tax liabilities | Tax-Advantaged: Interest deductions are capped at $750K of home debt, limiting tax benefits. Interest on SyntheticFi loans is deductible with no cap, potentially saving thousands annually. |
Business Loan
Business loans are used to finance business operations, expansions, or other related expenses. These loans often come with varying interest rates and terms, sometimes carrying high rates due to the business’s credit risk or limited financial history. Refinancing a business loan with SyntheticFi can leverage a client’s personal investment portfolio as collateral, potentially securing a lower interest rate and improving cash flow.
Mark, the founder of an e-commerce business in Austin, has a $400K business loan at 15% interest to fund his company’s operations. Due to the company's limited credit history, the loan carries a high interest rate, resulting in a monthly interest payment of $5K. This is a significant burden for his cash-strapped business, which is not yet profitable. With a personal investment portfolio of $1.2MM, Mark refinances the business loan with a SyntheticFi fixed-rate loan at 4% for 3 years.
Since there are no principal or interest payments required during the term of the loan, Mark can put his immediate cash flow into the startup's survival and growth. Once the online store turns a reliable profit in 3 years, Mark can pay back the loan. His total interest costs would be $48K, almost 75% in savings compared to the original loan (or $132K)!.
If Mark's business is still in the red after 3 years, or Mark wants to reinvest revenues back into growing it, he can roll the balance of the loan into a fresh SyntheticFi loan.
Core Considerations | Why SyntheticFi |
|---|---|
Cost of borrowing | Low Interest Rate: Business loans often have high rates (e.g. 15%) due to credit risk or limited financial history, increasing borrowing costs. SyntheticFi's rates don't depend on any of those measures so we can offer loans at significantly reduced interest (~4%). |
Repayment terms | Flexible Repayment: Business loans require regular principal and interest payments, putting pressure on cash flow for unprofitable or growing businesses. Fixed-rate loans require no payments during the term, with full amount due at maturity, preserving cash flow for business growth. Rollover Option: SyntheticFi allows better financial flexibility by letting you roll over the loan balance into a new loan if the business needs more time. |
Approval requirements | Broadly Accessible: Your approval doesn't depend on business creditworthiness and financials. We use investments as collateral, bypassing business credit or financial history requirements. |
Vehicle Loan
Vehicle loans, used to purchase a car, truck, or other vehicle, often carry interest rates ranging from 6% to 10% or higher, especially for luxury or used vehicles, and require fixed monthly payments over a set term. Refinancing a vehicle loan with a SyntheticFi floating-rate loan can lower interest costs and provide flexible repayment options, allowing you to adjust payments based on your cash flow needs.
Lisa, a marketing consultant in San Francisco, has a $100K vehicle loan at 9% interest for a luxury SUV, with monthly payments of $750 over the next 5 years. Her variable income from consulting makes it challenging to meet these fixed payments during lean months. With a $1M investment portfolio, Lisa refinances the vehicle loan with a SyntheticFi floating-rate loan at 4%.
Her monthly interest payment drops to $333, saving her $5K annually compared to the original loan’s payments. The floating-rate loan’s flexibility allows Lisa to skip interest payments in low-income months, adding them to the principal, or make larger repayments when she lands a big client, without penalties. Additionally, the interest on the SyntheticFi loan is tax-deductible as a capital loss, potentially saving her ~$1K in taxes annually if she has capital gains to offset, further enhancing her financial flexibility.
Core Considerations | Why SyntheticFi |
|---|---|
Cost of borrowing | Low Interest Rate: Vehicle loans typically range from 6% to 10% or higher, especially for luxury or used vehicles, increasing total costs. SyntheticFi loans charge interest as low as 4%. |
Repayment terms | Flexible Repayment: Instead of fixed monthly payments over a set term, SyntheticFi allows you to skip interest payments in low-income months (added to principal) or make larger repayments without penalties, aligning with cash flow. |
Personal Loan
Personal loans are unsecured loans used for various purposes, such as covering unexpected expenses, consolidating debt, or funding major purchases. These loans often carry high interest rates, ranging from 10% to 20% or more, due to the lack of collateral, making them costly over time. Refinancing a personal loan with a SyntheticFi fixed-rate loan can significantly lower interest rates, as approval is based on the client’s investment portfolio as collateral.
James, a tech executive in Seattle, took out a $150K personal loan at 12% interest to cover unexpected medical expenses for a family member. His monthly payment is $1.5K, straining his budget with 4 years remaining. With a $1.6M investment portfolio, James refinances the personal loan with a SyntheticFi fixed-rate loan at 4% for 4 years. Since SyntheticFi’s eligibility relies on his portfolio collateral rather than credit scores or income, he secures the lower rate, reducing his total interest cost to $6K over the loan term—a savings of $12K compared to the original loan’s $18K in interest. The fixed-rate structure ensures a predictable payment at loan maturity, easing his immediate budgeting concerns.
Core Considerations | Why SyntheticFi |
|---|---|
Cost of borrowing | Low Interest Rate: Personal loans often have high rates (10%–20% or more) due to their unsecured nature, leading to high borrowing costs. SyntheticFi's collateralized lending program offers rates as low as ~4%. |
Repayment terms | Flexible Repayment: Avoid making mandated monthly payments. With a fixed-rate loan, you don't make any payments during the term and with a floating-rate loan, you can pay at your convenience, easing immediate budgeting concerns. |
Approval requirements | Broadly Accessible: Our approval doesn't depend on credit scores and income. We use investments as collateral, making it accessible to a diverse range of clients. |
Conclusion
Refinancing with SyntheticFi can be a powerful alternative to traditional loan options. Our lending solutions provide lower interest rates, uncapped tax deductions, flexible payments, and are available to anybody with a modest-sized investment portfolio or larger. If you're interested in using SyntheticFi for your refinancing needs, you can book a call with one of our advisors.
