If you hold a substantial investment portfolio, you may be able to borrow against your stocks, shares and other investments without selling them. This type of financing is known as securities-backed lending, and one of the most established forms is a Lombard loan, where eligible investments are pledged as collateral in exchange for a credit facility.
The approach provides liquidity for property purchases, business opportunities, further investment or other capital needs while your underlying portfolio stays invested. Lenders typically advance 50% to 70% of a diversified portfolio's value, with more available for bonds and less for volatile single stocks. Pricing is generally based on a benchmark rate plus a lender margin.
This guide explains how to borrow against stocks and investment portfolios, how Lombard loans work, loan-to-value by asset class, current rates, eligible assets, private shares, costs, margin calls and how these facilities are structured.
Securities-backed lending is subject to individual circumstances, underlying securities and lender criteria. The value of securities can fall as well as rise, and borrowing may involve additional collateral requirements or repayment of part of the facility. If these requirements are not met, pledged investments may be sold. Rates, terms and availability are not guaranteed. Information is for general guidance only and does not constitute financial, tax or legal advice.
Borrowing Against Stocks at a Glance
| Question | Typical Position |
|---|---|
| Can you borrow against stocks? | Yes, eligible investments can be pledged as collateral |
| Do you have to sell your shares? | No, the purpose is to raise liquidity while retaining ownership |
| What is this type of lending called? | Securities-backed lending, portfolio lending or Lombard lending |
| What assets qualify? | Listed equities, bonds, funds, ETFs and other eligible securities |
| How much can you borrow? | 50% to 70% of a diversified portfolio, with more available for bonds and less for single stocks |
| Typical rate | Benchmark rate plus lender margin, depending on the portfolio and circumstances |
| Can you borrow against private shares? | Potentially, but far fewer lenders accept unlisted shares |
| Main risk | Falling portfolio values can trigger a margin call or forced sale |
Actual terms vary between lenders, portfolios and jurisdictions.
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Can You Borrow Against Stocks?
Yes. You can borrow money against stocks without selling them by using eligible shares as collateral for a loan or credit facility. Instead of liquidating the investment, the lender takes security over some or all of the portfolio, and you keep ownership, dividends and market exposure.
The amount available is set by applying a loan-to-value (LTV) ratio to the eligible investments. A lender will advance more against a diversified portfolio of highly liquid large-cap shares than against a concentrated holding in a single volatile company, so two portfolios of the same market value can support very different borrowing amounts.
Enness specialises in securities-backed lending for high-net-worth and ultra-high-net-worth clients with significant investment portfolios.
What Is a Lombard Loan?
A Lombard loan is a form of securities-backed lending that lets you borrow against eligible investments held within a portfolio, with those investments acting as collateral. Depending on the lender, eligible collateral can include listed shares, government bonds, corporate bonds, investment funds, ETFs, managed portfolios and other marketable securities.
Rather than selling investments to generate cash, the borrower pledges them. The portfolio normally remains invested, although restrictions may apply to trading or withdrawing assets while the facility is outstanding.
This is why Lombard lending is used by investors who are asset-rich but need liquidity without restructuring or liquidating their portfolio.
How Do You Borrow Against Your Stock Portfolio?
To borrow against a stock portfolio, a lender first assesses the investments you own and decides which it will accept as collateral. The process runs as follows:
- Your portfolio is assessed: The lender reviews the investments you hold, their value, liquidity, volatility, currency and concentration.
- Eligible assets are identified: Highly liquid securities receive a higher lending value, while concentrated, volatile or hard-to-sell holdings receive a lower value or are excluded.
- An LTV is assigned: The lender sets how much it will advance against the eligible portfolio.
- The investments are pledged: The eligible securities are held within an agreed custody or security structure, usually with the lending bank or an approved custodian.
- The loan is drawn: Funds can be drawn, often as a revolving facility that can be drawn, repaid and redrawn, with interest generally paid monthly.
- The portfolio is monitored: Because the collateral rises and falls in value, the lender monitors it throughout the life of the loan.
That last point matters. A Lombard loan is not based solely on your portfolio value when the facility begins. The relationship between the outstanding loan and the collateral value continues to matter throughout the facility.
How Much Can You Borrow Against Stocks? LTV by Asset Class
The amount you can borrow depends on the lending value the lender assigns to each of your investments, not simply the total value of your portfolio.
A £5m portfolio does not automatically mean a fixed percentage of £5m, because the lender assigns different LTVs to different assets.
As a general guide:
| Asset Pledged | Typical LTV |
|---|---|
| Government and investment-grade bonds | 80% to 95% |
| Blue-chip / large-cap equities | 60% to 70% |
| Diversified equity portfolio | 50% to 70% |
| Funds and widely traded ETFs | 50% to 70% |
| Concentrated or volatile single stocks | 20% to 50% |
| Private, unlisted, AIM or thinly traded shares | Often excluded or nil |
Assets that are highly liquid, widely traded, less volatile, diversified and denominated in major currencies receive stronger lending values.
UK investors commonly borrow around 50% to 60% of portfolio value. A lower initial LTV gives more protection against market movements than borrowing at the maximum available, so the composition of the portfolio matters as much as its size.
What Are the Interest Rates on a Lombard Loan?
Lombard loans are priced at a benchmark rate plus a margin. For sterling, the benchmark is SONIA. Other currencies may use relevant benchmarks such as SOFR for US dollars or EURIBOR for euros.
The margin depends on factors including the size and quality of the portfolio and the depth of the banking relationship. For large, well-diversified portfolios at major private banks, margins may be lower.
Rates are usually variable, and interest is generally paid monthly on an interest-only basis.
The overall cost will depend on the lender, portfolio, loan size, currency and wider circumstances. Borrowers should consider the total cost of the facility rather than focusing solely on the headline margin.
What Assets Can You Borrow Against?
Securities-backed lenders prefer investments that can be independently valued and sold quickly if necessary.
- Listed shares: Publicly traded equities are the most common collateral. Large, liquid companies are generally more attractive than thinly traded or volatile stocks.
- Bonds: Government and investment-grade corporate bonds can support high lending values because they tend to be less volatile than equities.
- Investment funds: Eligible mutual funds and diversified vehicles may be accepted.
- ETFs: Exchange-traded funds can provide attractive collateral because of their liquidity and diversification.
- Managed portfolios: A diversified discretionary portfolio managed by a recognised institution can be well suited to a Lombard facility, particularly where the bank has full visibility of it.
The lender ultimately determines which investments qualify and what lending value each receives.
Can You Borrow Against Shares in a Private Company?
Potentially, but borrowing against private company shares is far more specialist than borrowing against listed stocks because unlisted shares have no daily market price and limited liquidity.
Mainstream Lombard lenders often assign them no lending value, although private banks, credit funds and specialist lenders can consider financing where there is sufficient value and a credible route to repayment.
This is a distinct product with its own structuring, valuation and terms. It is particularly relevant for founders and executives whose wealth is concentrated in a successful private business.
Can You Borrow Against Restricted or Concentrated Stock?
Potentially. Executives, founders and early investors sometimes hold most of their wealth in a single listed company rather than a diversified portfolio.
These positions need more specialist underwriting because a fall in one company's share price could materially reduce the collateral value of the whole facility.
The lender may therefore apply a lower LTV, require additional collateral or diversification, apply concentration limits, use hedging, or structure the facility around a specific liquidity event.
Restricted stock is more complex because the lender must understand whether and when the shares can legally be transferred or sold. Specialist advice is therefore important when borrowing against concentrated, restricted or founder shareholdings.
Can You Borrow Against Stocks to Buy a House?
Yes. Releasing capital from an investment portfolio to fund a property purchase is one of the common uses of Lombard lending.
An investor with substantial wealth may prefer not to sell investments to fund a transaction, so a Lombard facility can provide a deposit, purchase a property outright, bridge a timing gap, fund renovations, or provide liquidity while longer-term finance is arranged.
This can be particularly useful where a purchase must complete quickly. Depending on the circumstances, securities-backed finance can also be combined with a high-value mortgage or bridging finance.
What Can a Lombard Loan Be Used For?
The flexibility of securities-backed lending means capital can be deployed for a wide range of purposes, subject to the lender's terms.
Potential uses include:
- Property deposits and purchases
- Business acquisitions
- Working capital or expansion
- Further investment
- Significant personal expenditure
- Bridging a temporary liquidity gap ahead of an expected inflow
The suitability of the structure depends on the intended use, loan duration and overall financial position.
Why Borrow Against Stocks Instead of Selling Them?
The principal reason is liquidity without liquidating the portfolio.
Selling investments means giving up exposure to their future performance and may force a sale during market weakness or before a planned horizon.
Borrowing keeps the portfolio invested and its strategy intact. Where a suitable portfolio already exists, it may also be arranged more quickly than conventional financing.
There is also a tax dimension. Borrowing is not a disposal of the underlying investments, so it does not itself crystallise capital gains. However, tax treatment depends on your circumstances and jurisdiction. Take tax advice rather than assuming borrowing always produces a tax advantage.
What Is a Margin Call, and How Do You Avoid One?
A margin call happens when your portfolio falls in value and the LTV rises above the lender's maintenance threshold.
At that point, you may need to add collateral, deposit cash or repay part of the loan. If the required action is not taken, the lender may sell the pledged investments in accordance with the facility terms.
You can reduce the risk by building in headroom rather than borrowing to the maximum.
Drawing 50% against a portfolio that qualifies for a higher LTV, for example, can leave a buffer before a margin call is triggered.
Diversifying the pledged portfolio, holding unpledged liquid assets, agreeing in advance how a call would be met, and stress-testing a market fall before borrowing are all sensible precautions.
The maximum available borrowing is rarely the most appropriate borrowing.
What Does It Cost to Borrow Against Stocks?
The cost of a Lombard facility depends on the lender, collateral, loan size, currency and wider circumstances. It is usually structured as a reference rate plus a lender margin.
The total cost can include:
- Interest
- Arrangement fees
- Custody costs
- Valuation or due diligence costs
- Legal costs
- Currency-related costs where relevant
Larger facilities backed by highly liquid diversified portfolios may attract more competitive pricing than smaller facilities secured against concentrated or volatile assets.
Compare the total facility cost, not just the headline margin.
Do You Still Receive Dividends When Borrowing Against Shares?
In many structures, you remain the beneficial owner of the pledged investments and continue to receive dividends or other distributions, subject to the specific custody and security arrangements.
The securities are pledged to the lender, so restrictions may apply. You may not be able to withdraw or sell pledged investments freely if doing so would breach the facility's collateral requirements.
Confirm the treatment of dividends, voting rights and trading permissions before entering the facility.
Do You Have to Transfer Your Investments to the Lender?
Sometimes.
Many banks require eligible investments to be held with the lending institution or an approved custodian before providing a Lombard facility, but structures vary.
For substantial portfolios, it may be possible to negotiate alternative custody or security arrangements. This can matter for investors who have an established relationship with an existing wealth manager and do not want to move their entire portfolio simply to obtain financing.
Who Uses Securities-Backed Lending?
Lombard loans are used mainly by high-net-worth and ultra-high-net-worth individuals whose portfolios provide significant collateral.
Typical borrowers include:
- Investors seeking liquidity without selling long-term holdings
- Entrepreneurs and business owners
- Company executives with concentrated shareholdings
- Property investors who need to move quickly
- Internationally mobile clients with assets across several jurisdictions
The common thread is significant investable wealth and a preference to stay invested.
Lombard Loan vs Selling Investments
| Borrow Against Investments | Sell Investments |
|---|---|
| Portfolio can remain invested | Investment exposure ends for assets sold |
| Creates interest expense | No borrowing interest |
| Introduces collateral and LTV risk | No margin-call risk |
| Can provide rapid liquidity | Requires asset disposal |
| May preserve portfolio strategy | Can alter portfolio allocation |
| Loan eventually needs repaying | Sale provides permanent liquidity |
Borrowing is not automatically better than selling.
The decision depends on the expected duration of the funding need, the cost of borrowing, the portfolio outlook, your tax position and your ability to withstand market volatility.
Example: Funding a Prime London Property Purchase
An example involved clients who wanted to acquire a prime London property quickly without liquidating a substantial investment portfolio.
Selling would have crystallised significant capital gains and interrupted their long-term investment strategy.
Enness arranged a Lombard facility secured against the portfolio, releasing liquidity to complete the purchase while the clients retained ownership and market exposure.
This illustrates how borrowing against investments can potentially fund a major purchase without requiring the immediate sale of an investment portfolio.
How Enness Arranges Loans Against Stocks and Investment Portfolios
Securities-backed lending is not a standardised market. Different private banks, investment banks and specialist lenders can assign different lending values to the same portfolio.
Enness works with an international network of lenders to arrange Lombard loans and other securities-backed finance for high-net-worth and ultra-high-net-worth clients.
This can include clients with:
- Diversified portfolios
- Concentrated listed shareholdings
- Complex international assets
- Significant bond portfolios
- Managed investments
- Private company equity
- Bespoke collateral requirements
Rather than assessing only the immediate amount required, the objective is to structure the facility around the portfolio, the liquidity requirement, risk tolerance and wider circumstances.
Frequently Asked Questions
Can I Borrow Money Against My Stocks?
Yes. Eligible stocks can be pledged as collateral for securities-backed lending. The lender assigns a lending value to the shares and provides a loan or credit facility against them.
How Do I Borrow Against My Stock Portfolio?
A lender assesses your portfolio, identifies eligible securities, assigns lending values and establishes a facility secured against those investments. The portfolio is then held with an approved custodian and monitored while the loan is outstanding.
What Is a Loan Against Stocks Called?
It is called securities-backed lending, portfolio-backed lending, investment-backed lending or a Lombard loan, depending on the lender and structure.
Can I Borrow Against Stocks Without Selling Them?
Yes. This is the principal purpose of securities-backed lending. The investments are pledged as collateral rather than sold, so you retain ownership and market exposure.
How Much Can I Borrow Against My Investment Portfolio?
The amount available depends on the individual assets and the lender's assessment. Diversified portfolios of liquid securities can generally support higher LTVs than concentrated or volatile holdings.
What Are Lombard Loan Interest Rates?
Lombard loans are generally priced using a benchmark rate plus a lender margin. The margin depends on factors including portfolio quality, loan size, relationship with the lender and overall circumstances.
Can I Borrow Against Shares in a Private Company?
Potentially, although private shares are harder to finance than listed securities because they are less liquid and harder to value. Specialist lenders may consider established businesses and significant shareholdings.
Can You Borrow Against Stocks to Buy a House?
Yes. A securities-backed facility can potentially provide a deposit or fund a property acquisition without requiring you to sell the underlying portfolio. Depending on the circumstances, it can also be combined with a mortgage or bridging finance.
What Happens If My Stocks Fall After I Borrow Against Them?
If the collateral value falls sufficiently, the lender may issue a margin call. You may then need to provide additional collateral or repay part of the loan. If the requirements are not met, the lender may sell pledged investments in accordance with the facility terms.
Do I Still Own Stocks Used as Collateral?
Generally, yes. The investments remain yours but are pledged as security, so your ability to sell, transfer or withdraw them may be restricted while the facility is outstanding.
Can I Continue Receiving Dividends?
Often yes, depending on the facility and custody structure. Confirm the treatment of dividends and distributions with the lender before entering the facility.
What Is a Lombard Loan?
A Lombard loan is a credit facility secured against eligible financial investments such as shares, bonds, funds or other marketable securities, allowing you to raise cash without selling them.
Are Lombard Loans Available in the UK?
Yes. UK and international private banks and specialist lenders provide securities-backed lending to qualifying borrowers, usually structured in GBP, USD or EUR, although eligibility and terms vary.
Is Borrowing Against Stocks Risky?
It can be. The main risk is that falling investment values increase the LTV and trigger a margin call. If additional collateral or repayment cannot be provided, investments may be sold by the lender.
What Is the Difference Between a Lombard Loan and a Margin Loan?
A margin loan from a broker is mainly used to buy more securities and can be highly sensitive to changes in collateral values.
A Lombard loan from a private bank is generally a broader liquidity tool that can fund a range of purposes, often as a longer-term revolving facility.
Both carry margin-call risk.
Conclusion
Borrowing against stocks can provide a source of liquidity for investors who hold significant financial assets but do not want to sell them.
Through a Lombard loan or other securities-backed lending facility, eligible stocks, bonds, funds and portfolios can be pledged as collateral to raise capital for property, business, investment or personal needs.
The key question is not simply whether you can borrow against your stocks, but how the facility should be structured. Portfolio composition, LTV, concentration, margin-call thresholds and custody arrangements can all affect both the amount available and the risks involved.
For substantial or complex portfolios, comparing multiple lenders can be valuable because different institutions may assign different lending values and terms to the same assets.
Speak to Enness about structuring a loan against stocks, shares or an investment portfolio.
Enness does not give advice on Securities Backed Lending or investments and lender introductions are unregulated. This guide is for information and illustrative purposes only and nothing contain within should be construed as advice or a recommendation and is not an invitation to buy or sell securities.
The views and opinions expressed in this piece are those of the author and do not constitute advice or a recommendation. They do not necessarily reflect the official policy or position of Enness and are not intended to indicate any market or industry viewpoints, or those of other industry professionals.
Always seek advice from tax and legal professionals.
Financing options available to you will depend on your requirements and circumstances at the time.
