Lombard loans and bridging loans both offer ways to borrow substantial sums without selling your investments or property.
But they work quite differently, and choosing between them depends on your specific situation.
Let’s look at how these lending options work in practice, what they offer, and most importantly, which might be the better choice for your circumstances.
We’ll explore real examples of how other business owners and investors have used these loans, and help you understand what lenders look for when they assess applications.
Understanding Lombard Loans
Many investors don’t realise they can use their investment portfolio to secure a loan while keeping their investment strategy in place.
A Lombard loan lets you borrow against your liquid assets – like stocks, gold bullion, government bonds, or investment funds – without needing to sell them.
Think of it as similar to a secured loan, but instead of your house acting as security, you’re using your investment portfolio.
With Lombard lending, also known as portfolio lending, you’ll keep ownership of your investments, and they’ll continue to work for you in the market. The main difference is that your shares or bonds serve as the lender’s security instead of bricks and mortar.
Most lenders readily accept mainstream investments as security.
These include shares listed on major stock exchanges, government bonds, and established investment funds. However, they might be more cautious about assets like cryptocurrency or shares in smaller companies.
Let’s look at how this works in practice.
Say you’re a business owner with a £2 million investment portfolio. You spot an opportunity to buy out a competitor, but you need £800,000 within a few weeks. Rather than selling investments and potentially triggering tax bills or missing out on growth, you could use your portfolio as security, by using a Lombard loan.
The amount you can borrow depends on your investments’ value and type. Lenders can advance up to 60% against a mixed portfolio of blue-chip shares and bonds. They’ll monitor the portfolio’s value throughout the loan term – if markets fall significantly, you might need to provide additional security or reduce the loan.
You’ll find these loans particularly useful when you need quick access to money but want to keep your investment strategy on track. They’re also worth considering if you’re looking to avoid capital gains tax from selling investments, or if you want to maintain your position in a rising market.
Read more: Lombard Loans: Portfolio-Backed Lending Solutions
How Bridging Loans Compare
Bridging loans work differently from Lombard loans – they use property as security and focus on speed and flexibility.
These short-term loans help you move quickly when standard mortgage timelines won’t work for you.
You’ll find bridging loans particularly handy when you need to act fast in property deals. They’re a bit like a quick-access mortgage that you’ll repay within months rather than over many years.
Let’s look at a real example.
One of our clients, a property investor in Manchester, spotted an apartment block at auction. The units were undervalued because the seller needed a quick sale. Our client had equity in other properties but couldn’t release it fast enough through remortgaging. A bridging loan against their existing property portfolio meant they could bid confidently at auction, knowing they had funds available for the 28-day completion deadline.
Most bridging lenders will consider various property types as security – from residential homes to commercial buildings and even land. The property’s value and condition play a big part in what you can borrow. You’ll usually be able to borrow up to 75-80% of the property’s value, sometimes more with additional security.
The structure of these loans is straightforward but flexible.
You can often choose how to handle the interest payments – either pay monthly or roll them up and pay everything at the end. This flexibility helps if you’re expecting a lump sum later, like when you’re selling another property.
What really sets bridging loans apart is their speed and flexibility, a bridge loan can complete in a matter of days if everything lines up.
Read more: Bridging Loans
Let’s talk bridging loans!
Key Differences Between the Loans
When choosing between a Lombard loan and a bridging loan, you’ll find several key differences that could sway your decision one way or the other.
Let’s break down what sets them apart.
The biggest difference lies in what you can use as security:
- Lombard loans use your investment portfolio – shares, bonds, and funds that can be sold quickly if needed.
- Bridging loans, on the other hand, are secured against property.
This affects how much you can borrow – Lombard lenders look at how easily they could sell your investments, while bridging lenders focus on property values.
Both are quick to arrange.
With a Lombard loan, if you’ve got a well-structured investment portfolio, you might get funds within a few days. Bridging loans can also move quickly, but they’ll need property valuations and legal work, which could add a week to the process.
Both will charge monthly interest, and expect full repayment when the term ends.
Risk works differently for each.
With portfolio lending, stock market drops could mean you need to put up more security or reduce your borrowing. A big drop in share prices will push your LTV up, and this may trigger a margin call by the lender.
For bridging loans, your main risk comes from having a solid exit plan – you need to know exactly how you’ll repay the loan when it ends.
Here’s a simple comparison:
Lombard Loans
- Security: Investment portfolios
- Speed: 2-5 days possible
- Term length: Usually under 12 months
- Interest: Bespoke percentage over base rate
- Best for: Keeping investment strategy intact
Bridging Loans
- Security: Property assets
- Speed: 5-10 days common
- Term length: 3 to 12 months
- Interest: Monthly rate
- Best for: Quick property purchases
Which option works better depends on your assets, timeline, and what you’re trying to achieve. You’ll need to weigh up these differences against your specific needs.
Choosing the Right Option
The right option comes down to more than just what assets you own.
You’ll need to think about your timeline, how you’ll repay the loan, and how comfortable you are with different types of risk.
Start by looking at your assets.
If you’ve got a solid investment portfolio of mainstream stocks and bonds, a Lombard loan might make sense – especially if you believe those investments will keep growing.
But if most of your wealth sits in property, or you’re looking to buy a specific building, a bridging loan could be your better bet.
Are you looking at a short-term opportunity that needs quick action? Or do you want more flexibility with your repayment schedule?
Bridging loans work well for clear-cut situations where you know exactly when and how you’ll repay – like when you’re waiting for a property sale to complete. Investment portfolio loans can offer more breathing room if your timeline isn’t set in stone.
Here’s how one of our clients made their decision.
They owned both a £1 million share portfolio and several investment properties. They needed £450,000 to buy stock for their business ahead of their busy season. While they could have used either loan type, they chose a Lombard loan because:
- Their shares were performing well in a rising market
- They wanted to repay the loan gradually from business profits
- Property valuations would have slowed down the process
- They preferred not to add another charge to their properties
Think about what could go wrong too.
With an investment-backed loan, you’ll need to be comfortable with the possibility of putting up more security if markets fall. With bridging loans, you need complete confidence in your exit strategy – whether that’s a property sale or refinancing to a long-term mortgage.
How Long Does Each One Take to Arrange
The speed of getting your loan depends on several factors. Let’s look at what’s involved in arranging each type of loan.
For Lombard loans, you can often move quite quickly.
If your investment portfolio sits with a major bank or investment house and contains mainstream shares or bonds, you might get everything sorted within 2-5 days. The lender mainly needs to check what investments you hold and confirm they meet their criteria.
However, if your investments are spread across different platforms or include more complex assets, it could take longer while valuations are completed. Most lenders will want to see at least the last three months of portfolio statements.
Bridging loans usually take a bit more time because property is involved.
You’ll need:
- A property valuation (1-2 days)
- Legal checks (3-7 days)
- Local authority searches (if required)
- Confirmation of your exit strategy
Even so, bridging loans can complete much faster than other types of secured lending.
With all documents ready and a straightforward property as security, you could get your money in under two weeks. More complex cases – like loans against multiple properties or unusual buildings – might need 3-4 weeks.
Turbo charged bridging
If your preferred option is a bridging loan, but you need the money REALLY fast, you need something a bit special.
For this to work you will need:
- A fairly standard residential property in good condition
- Experienced solicitors who can act fast
- A loan to value below 70%
- First charge preferred
With this basic criteria we can approach a non-status bridging lender and request that the valuation they use is an Automated Valuation Model (AVM).
- No credit checks needed
- No income checks
- No valuation visit
- Same day approval
Well presented cases can move to the legal stage the same day! This shaves days off a standard timeframe.
Read more: Non-Status Bridging Loans Explained
The Role of Professional Advice
Getting professional help with these loans makes sense – these aren’t everyday financial products you can simply apply for online.
A broker with access to multiple lenders can make a real difference to both the process and the terms you receive.
With bridging loans especially, having someone coordinate between valuers, solicitors, and lenders can shave days or even weeks off completion times. Plus, because brokers bring lenders regular business, they often secure better terms (and service) than you might get directly.
You’ll find this particularly helpful if your case isn’t straightforward – perhaps you need a combination of both loan types, or you’re working with international assets, or all three.
A good broker will structure your application to give you the best chance of approval at competitive rates.
Alternative Options to Consider
Before settling on either a Lombard or bridging loan, you might want to look at other ways to raise money against your assets.
For instance, if you own your business premises, a commercial mortgage could offer longer-term finance at lower rates. Commercial bridging loans offer short-term financing.
Some private banks will offer bespoke lending solutions that combine elements of different loan types. They might secure lending against a mix of assets – perhaps using both your investment portfolio and property as security.
This can sometimes give you better terms overall or let you borrow more.
Finally
Choosing between these two comes down to your specific situation, and plans over the next 12 months.
Consider what assets you have available, how quickly you need the money, and most importantly, how you’ll repay the loan.
For quick access to funds while keeping your investment strategy on track, a Lombard loan often makes sense. If you’re focused on property deals or have most of your wealth in real estate, a bridging loan might be your better option.
Your next step?
Talk to a specialist broker who understands both types of lending.
They’ll help you weigh up your options, find the right lenders, and structure your application for the best chance of success. With loans this size, getting professional advice early can save you both time and money.
FAQ
At Bridging Finance London, we arrange loans starting from £150,000. Both Lombard and bridging loans are available at this level, though terms may be more competitive for larger amounts.
Yes, some lenders offer hybrid solutions using multiple asset types as security. This can sometimes lead to better terms or higher borrowing amounts.
Lombard loans can complete in 2-5 days with a straightforward investment portfolio. Bridging loans usually take 5-15 days due to property valuations and legal requirements.
Lombard loans often offer more flexible terms, sometimes up to several years. Bridging loans usually run for 3-18 months, though some lenders offer up to 36 months.
Many lenders accept international investments listed on major stock exchanges. However, they might apply different loan-to-value ratios for non-UK assets.
You’ll definitely need a solicitor for a bridging loan as it involves property and legal charges. For Lombard loans, legal requirements are often simpler, though you will want legal advice for larger amounts.
There are specialist loans available so investors can borrow against their Bitcoin holdings. So called crypto-backed loans can offer 40-50% of Bitcoin and Altcoin value.
Lombard loans use market values of listed investments, which are easily checked. Bridging loans require professional property valuations, which take more time and incur additional costs.
