Looking to buy property but want to keep your investment portfolio intact?
You can actually use your stocks, shares and other investments as security for property finance. This approach lets you access substantial funding without selling your investments, helping you avoid potential capital gains tax and keep your investment positions.
It’s particularly useful when you need quick access to finance or want more flexible terms than traditional mortgages offer.
If you’ve got an investment portfolio worth £250,000 or more, you might be surprised at how straightforward it can be to use these assets to fund property purchases.
Let’s look at how it works and what you need to know.
Using Investment Portfolios for Property Finance
When you use your investment portfolio to fund property deals, you’re essentially borrowing against the value of your investments.
Your portfolio acts as security for the loan, much like a property acts as security for a mortgage. The main difference is that you keep ownership of your investments and continue to benefit from any growth or income they generate.
You can use various types of investments as security, including stocks listed on major exchanges, government and corporate bonds, and investment funds.
Cash deposits in your portfolio can count too. The key is that these investments need to be easily valued and sold if necessary.
Most lenders will consider lending up to 60-70% of your portfolio’s value, depending on the types of investments you hold. They’ll look at factors like the mix of assets, their volatility, and how easily they can be sold.
For example, blue-chip stocks and government bonds will get better lending terms than smaller company shares or more complex investments.
Introducing Lombard Loans
Lombard loans are a specialist type of lending used by high-net-worth individuals, where you can borrow against your investment portfolio. You can use these loans for many purposes – from property purchases to business expansion or creating extra liquidity.
Lombard loans let you keep your investment portfolio intact while borrowing against its value. You’ll maintain ownership of your investments and still receive any growth, dividends, or income they generate.
These loans work well if you have a portfolio of at least £250,000 in readily marketable investments like stocks, bonds, or investment funds.
You won’t find Lombard loans on the high street. They’re mainly offered by private banks and specialist lenders who understand complex financial arrangements and high-value lending.
This means you’ll need an experienced broker to access the best options and lenders.
Read more: Lombard Loans: Portfolio-Backed Lending Solutions
Benefits for Property Investors
Using your investment portfolio to fund property deals offers several advantages over traditional property finance.
For starters, it’s often much faster than arranging a mortgage – you could have funds available within a week.
You won’t need to sell your investments, which means you can avoid triggering capital gains tax and stay invested in the market. This can be particularly valuable if you’ve built up a well-performing portfolio or if you receive regular dividend income from your investments.
The flexibility is another big plus.
You can get flexible repayment terms, and some lenders will let you roll up the interest rather than making monthly payments. This can help with cash flow, especially if you’re buying property to renovate and sell.
Let’s talk!
Suitable Investments for Lombard Loans
Lenders look for high-quality, easily valued investments when considering Lombard loans. Here’s what they’ll accept:
Stocks and Shares
- Shares listed on major stock exchanges like the FTSE 100 or S&P 500
- Blue-chip company stocks
- Exchange-traded funds (ETFs)
Fixed Income Securities
- Government bonds (gilts)
- High-grade corporate bonds
- Treasury bills
Investment Funds
- Unit trusts/OEICs
- Investment trusts
- Mutual funds from established fund managers
Cash and Cash Equivalents
- Fixed-term deposits
- Money market funds
- Cash holdings in investment accounts
Most lenders won’t accept:
- Shares in small or unlisted companies
- Complex financial products
- Cryptocurrency investments
- ISAs or pension funds
- Investments in high-risk markets
The amount you can borrow depends on your investment mix. Cash and government bonds often allow higher borrowing levels than stocks, as they’re less risky. Your broker can help structure your portfolio to maximise your borrowing potential while maintaining your investment strategy.
Crypto-backed loans!
Who Can Use Portfolio-Based Property Finance
This type of finance works well for several types of property investors.
You might be an experienced investor looking to expand your portfolio, or perhaps you’re making your first property investment but have built up substantial investments elsewhere.
To qualify, you’ll need an investment portfolio worth at least £250,000, held in readily marketable investments.
The property you’re buying can be residential or commercial, and many lenders will consider both investment properties and properties you plan to occupy.
The assessment process focuses more on your investment portfolio than your personal income, which can make it easier to qualify than for traditional mortgages. However, lenders will want to see that you have a clear plan for managing both the property and your investment portfolio.
The Application Process
Getting started with portfolio-based property finance begins with an assessment of your investment portfolio.
A broker will look at your investments’ composition, value, and liquidity to determine how much you could borrow.
You’ll need to provide recent portfolio statements and details of the property you want to buy.
The legal work tends to be more straightforward as lenders are only concerned with securing their charge over your investment portfolio. However, you’ll still need solicitors to handle the property purchase itself.
Working with a Broker
A specialist finance broker with experience in portfolio lending can make a big difference to your property purchase. They’ll know which lenders offer the best terms for your situation and can access deals not available directly.
Your broker will help structure the finance to match your needs, whether that’s minimising costs, maximising borrowing, or finding the most flexible terms. They’ll also manage the application process and coordinate with other professionals involved in your purchase.
Risk Considerations and Management
While using your investment portfolio for property finance offers many benefits, it’s important to understand the risks. The main one is that market falls could lead to a ‘margin call’, where you need to provide additional security or repay part of the loan.
You’ll need to monitor both your property and investment portfolio carefully.
Some investors keep a cash buffer in their portfolio to handle any margin calls, while others make sure they have other assets they could use as additional security if needed.
As with all short-term borrowing, having a clear exit strategy is essential. This might be selling the property, refinancing to a mortgage, or using rental income to repay the loan over time.
Practical Steps to Get Started
If you’re interested in using your investment portfolio to fund a property purchase, start by reviewing your portfolio’s composition and value.
Consider whether you might need to restructure any investments to make them more suitable for lending.
Gather recent portfolio statements and details of the property you’re interested in. Then speak with a broker who specialises in this type of finance.
They can assess your situation and explain your options in detail.
Remember that timing can be important – both in terms of property market conditions and the state of financial markets. A good broker will help you plan the best time to move forward with your purchase.
Need help understanding your options for portfolio-based property finance?
Get in touch with our team. We can explain how Lombard Loans could work for your situation and help you access the most suitable finance for your property plans.
FAQ
You’ll need an investment portfolio worth at least £250,000 in readily marketable investments like stocks, bonds, or funds.
Yes, you continue to receive any dividends and benefit from market growth while your portfolio acts as security.
Both residential and commercial properties are eligible, including investment properties and properties for your own use.
Typically within 1-2 weeks.
No, the investments must be held in a standard investment account due to regulatory restrictions on ISAs and pensions.
Usually 60-70% of your portfolio’s value, depending on the type and mix of investments.
You’ll need lender approval and will need to maintain minimum portfolio values.
Lombard loans are used to borrow against traditional investments such as stocks and shares. Crypto backed loans are available, with loans from £100,000.
No, not better, just different.
A bridging loan can still be arranged very quickly, and the money raised can be used for any purpose. But you need a property (or properties) for the loan to be secured against.
Lombard loans allow you to borrow against your investment portfolio, without using a specific property.
No, not at all.
Lombard Loans are incredibly flexible and can be used for many different purposes; property purchase, business acquisition, tax bill, car purchase, boat purchase.
