Direct answer: establish why the client does not want to sell, which investments they legally own, the portfolio’s eligibility, liquidity, concentration, currency and existing security, and how much property borrowing is required. Compare a conventional mortgage, a portfolio-backed facility and a combined structure on interest, fees, custody, margin calls, repayment timing and stress outcomes. If portfolio borrowing supplies the deposit, disclose it to the mortgage lender from the outset.
Clarify Why the Client Wants to Preserve the Portfolio
The client may wish to avoid disrupting a long-term investment strategy, crystallising a gain, selling during weak markets, losing a concentrated position or missing a future liquidity event. Those reasons may be commercially understandable, but they do not prove that borrowing is cheaper or safer.
The investment adviser and tax adviser should assess the consequences of retaining, selling, transferring or pledging assets. Willow can assess how the resulting liquidity and debt interact with the UK property-finance plan.
Is the client avoiding a permanent sale for a sound long-term reason, or merely replacing visible transaction costs with less visible leverage and collateral risk?
Four Structures May Need Comparing
| Structure | How the purchase is funded | Principal questions |
|---|---|---|
| Mortgage only | Property-backed loan plus unborrowed cash deposit. | Are income, deposit, property and repayment acceptable without touching investments? |
| Portfolio loan only | Investment-backed facility funds the purchase. | Does an on-demand or shorter-duration facility create excessive margin and refinancing risk? |
| Mortgage plus portfolio loan | Mortgage funds part; portfolio borrowing supplies some or all remaining cash. | Will the mortgage lender accept the borrowed deposit and combined debt service? |
| Partial asset sale plus mortgage | Selected investments are realised to reduce borrowing. | Would lower leverage provide a more resilient outcome after appropriate investment and tax advice? |
A fifth route may be to delay the purchase until another liquidity event. The correct comparison includes the cost and risk of waiting as well as the cost and risk of each facility.
Review the Portfolio as Collateral, Not Merely as Wealth
Establish the collateral profile
- legal owner and beneficial owner;
- custodian, manager and booking jurisdiction;
- total market value and valuation date;
- eligible versus ineligible holdings;
- equities, bonds, funds, cash and other asset mix;
- single-stock, sector, country and manager concentration;
- restricted, unvested, private or illiquid positions;
- base currency and currency of each major holding;
- existing margin, pledge, lien or withdrawal restriction;
- historic volatility and current unrealised gains or losses;
- income and expected withdrawals; and
- other family commitments the portfolio must support.
The lender normally applies its own advance rates and eligibility rules. A £5 million portfolio does not necessarily provide £5 million of borrowing capacity, and that capacity can change as markets and holdings change.
Margin Calls and Forced Sales Are Central Risks
UBS’s current UK Lombard information warns that if pledged securities fall below a required level, the client may need to provide additional collateral or repay part or all of the loan; if they cannot, investments may be liquidated. Investec’s portfolio-loan information similarly describes margin calls, close-out and on-demand repayment.
This risk can crystallise at the least convenient time. A market decline may reduce collateral value while the client still owns the property, must service the mortgage and may be reluctant or unable to sell other assets.
A mortgage lender looks primarily to the property and agreed repayment. A portfolio lender continuously monitors marketable collateral that can fall in value every day.
A Portfolio-Funded Deposit Is Still Borrowed Money
If the client uses a Lombard or portfolio loan for the deposit, acquisition tax or fees, the property lender must be told. The second facility creates interest costs, a liability and a claim over separate assets. It can affect affordability, credit assessment and the source-of-funds review.
The outline should show:
- deposit amount drawn from the facility;
- interest rate, currency, term and repayment basis;
- current and stressed collateral coverage;
- whether the facility is committed or on demand;
- monthly or capitalised interest;
- margin-call and close-out mechanics;
- the proposed repayment source; and
- what happens if the mortgage completes but portfolio availability reduces beforehand.
Do not describe borrowed proceeds as personal savings merely because the money arrives in the client’s bank account before completion.
Custody and Investment Relationships Can Be Part of the Price
A portfolio lender generally needs effective security and control over eligible investments. This can require the assets to be held with the lending bank or an approved investment manager. Investec currently states that its portfolio must be managed by its named investment partner; another bank may have different custody and management requirements.
The client should understand transfer timing, investment-management terms, custody fees, dealing restrictions, collateral substitutions, permitted withdrawals and what happens if they want to change manager. The mortgage comparison should not ignore these relationship costs.
Any recommendation to transfer or change investments must come from an appropriately authorised investment adviser.
Avoid Currency and Duration Mismatches
The property and mortgage may be sterling while the portfolio and Lombard facility are in US dollars, euros or another currency. Borrowing in the portfolio currency can reduce one mismatch but leaves the sterling purchase exposed at conversion; borrowing in sterling against foreign assets can cause collateral coverage to move with both markets and exchange rates.
Duration matters as well. A long-term home financed partly by a callable or short-term portfolio facility can require refinancing at an uncertain time. The repayment plan should state why that mismatch is acceptable and how it will end.
Stress the Combined Structure Before Exchange
| Stress | Question to answer | Possible response to establish |
|---|---|---|
| Portfolio falls materially | How much additional collateral or repayment could be required? | Cash buffer, lower initial advance or unpledged liquid assets. |
| Interest rates rise | Can the client service both facilities? | Affordability buffer, fixed terms or planned debt reduction. |
| Sterling strengthens | Does foreign collateral support less sterling debt? | Currency matching, hedge advice or larger collateral buffer. |
| Liquidity event is delayed | Can the facilities remain in place? | Alternative income, asset sale or refinance plan. |
| Custodian restricts transfer | Can funding still complete on time? | Early transfer work, alternative collateral or revised timetable. |
UBS’s published leverage guidance recommends planning a specific repayment source, timeline, backup and stress test. Those principles are useful regardless of lender.
Prepare the Evidence in Parallel
The portfolio lender may require recent holding statements, cost and custody information, mandate details, ownership verification and proposed portfolio changes. The mortgage lender may require the portfolio facility agreement, monthly cost, collateral terms, deposit trail and confirmation that the borrowing is permitted.
Both lenders can require source-of-wealth and source-of-funds evidence. The client’s explanation should be consistent across the mortgage application, conveyancer, private bank, investment manager and tax adviser.
Illustrative Scenario: A Diversified Portfolio Funds Part of the Deposit
Example only: an international executive wants to buy a £4 million London home.
The client has a £6 million managed portfolio, £1 million cash and no wish to realise investments. They propose a £2.4 million mortgage and a £600,000 portfolio loan for part of the deposit and costs. The portfolio is mainly USD-denominated and includes a concentrated employer shareholding.
The review should establish eligible collateral after excluding or reducing the concentrated holding, disclose the portfolio debt to the mortgage lender, model both interest costs, stress equities and GBP/USD, confirm custody and transfer timing, and identify an exit that does not depend solely on continuing market growth.
The adviser insight: retaining the portfolio may preserve investment exposure, but the client also retains its downside while adding debt against both investments and property.
When a No-Sale Property Strategy Should Trigger a Referral
Involve Willow when:
- the client wants to preserve investments rather than use cash;
- a portfolio facility may fund the deposit, tax or fees;
- the proposed collateral is concentrated, restricted or volatile;
- assets are held offshore or in several currencies;
- the portfolio is already pledged or margined;
- a custodian or investment-manager transfer may be required;
- the property lender has not approved the borrowed deposit;
- interest may be capitalised rather than paid monthly;
- the portfolio facility is on demand or shorter than the mortgage;
- repayment depends on a future bonus, vesting, sale or distribution;
- the client is comparing a mortgage with a full portfolio-funded purchase; or
- the timetable leaves little room for collateral and source-of-funds checks.
Keep the Professional Responsibilities Clear
Willow can assess mortgage and property-finance routes, explain how portfolio debt interacts with the mortgage and coordinate lender evidence. Willow does not provide investment, Lombard, portfolio-management, tax, legal, accounting, custody, trust, immigration or foreign-exchange advice.
The client’s investment adviser, wealth manager, tax adviser, accountant, lawyer and international adviser retain responsibility for advice within their own permissions and jurisdictions. Investment sale, retention, pledge, transfer or hedging decisions require appropriate advice.
Lending remains subject to status, valuation, lender criteria and full underwriting.
A Useful First Outline
An anonymous initial discussion can include residence, property, price and timing; desired mortgage; cash deposit; portfolio value, currency, concentration and custody; proposed portfolio borrowing; existing debt; repayment source; and whether a transfer or partial sale is acceptable.
The purpose is to identify a resilient property-finance structure before the client pledges assets or exchanges contracts.
Explore More Guidance for International Advisers
Visit the International Adviser Hub for further guidance on high-net-worth mortgages, global assets, private banking, portfolio liquidity and UK property finance.
Explore the International Adviser HubFrequently Asked Questions
These answers provide general guidance. Mortgage, portfolio-lending, investment and regulatory outcomes remain case-specific.
Can a client use a portfolio loan to buy UK property?
Potentially. Some lenders permit portfolio-loan proceeds to be used for a property purchase, but the portfolio lender’s purpose rules and the property lender’s treatment of borrowed funds must both be confirmed.
Is borrowing against investments safer than selling them?
Not inherently. It avoids an immediate sale but creates interest, leverage, collateral-value risk and the possibility of margin calls or forced liquidation during a market fall.
Will the mortgage lender accept a borrowed deposit?
Some may, subject to full disclosure and affordability, while others may restrict it. The mortgage lender must understand the source, security, payments and repayment terms before an application is presented.
Which investments can support a Lombard or portfolio loan?
Eligibility and advance rates vary. Diversified listed securities, funds, bonds and cash may be considered, while concentrated, illiquid, restricted or highly volatile holdings can receive a lower value or be excluded.
Does the investment portfolio have to move to the lending bank?
Often the lender requires custody, management or control arrangements over the pledged portfolio. Current product information should be checked before assuming the client can leave every asset with the existing provider.
Can a portfolio loan replace a residential mortgage?
It may fund all or part of a purchase, but the facility can be shorter-term, on demand and exposed to collateral calls. The client should compare duration, repayment, regulation and risk rather than treating it as an equivalent mortgage.
When should Willow be involved?
Before the client pledges or transfers investments, uses borrowed money as the deposit, exchanges contracts or relies on a future sale or bonus to repay both facilities.