For wealthy individuals, access to liquidity is rarely about the ability to borrow — it is about choosing the right instrument for the right objective. In 2025, two of the most common ways to unlock value from investment portfolios are Securities Backed Lending (SBL) and margin loans. On the surface, they may appear similar. Both use portfolios of equities, bonds, or funds as collateral, allowing clients to raise capital without liquidating their assets.

But the similarities end quickly. The two facilities differ significantly in purpose, risk profile, and suitability for property finance. Misunderstanding these differences can result in higher risk, unexpected costs, or unsuitable funding strategies.

In this blog, we’ll compare SBL and margin loans in detail, exploring when each works best, how lenders structure them in 2025, and what high-net-worth clients need to know before choosing between the two.

What Is Securities Backed Lending?

Securities Backed Lending is, at its core, a credit facility secured against a diversified, liquid portfolio. Unlike margin loans, the funds do not need to be used for reinvestment. Borrowers can apply proceeds to a wide range of objectives, from prime property purchases and business funding to personal investment opportunities.

The facility is structured to preserve the portfolio. The borrower continues to benefit from capital growth and income while accessing liquidity. Loan-to-value ratios in 2025 typically sit between 50 and 70 percent of the eligible portfolio value, depending on the stability and quality of the assets.

Repayments are usually structured as interest-only or bullet facilities, often lasting one to three years. SBL is therefore ideal where liquidity is needed quickly and where the borrower has a clear plan for refinancing or repayment.

What Is a Margin Loan?

A margin loan is different. It is specifically designed for investors to borrow against their portfolio to purchase more securities. The proceeds cannot usually be used for external purposes such as property acquisition or wealth planning.

The risk dynamics are also different. Margin loans are highly sensitive to market volatility. If portfolio values fall, margin calls are immediate, and lenders may liquidate positions automatically to restore loan-to-value ratios. While this leverage can amplify gains, it equally magnifies losses.

In 2025, private banks and brokers continue to offer margin loans, but they remain primarily a trading tool rather than a wealth management or property finance solution.

Key Differences Between SBL and Margin Loans

Although both facilities are secured on portfolios, their differences are significant:

• Purpose of Funds: SBL allows broad use of proceeds, including property finance. Margin loans are generally restricted to purchasing securities.

• Risk Profile: SBL is structured around preserving wealth, with more measured loan-to-value ratios. Margin loans are designed to amplify investment exposure, carrying higher volatility risk.

• Repayment Terms: SBL facilities are typically medium-term, often one to three years, with clear repayment structures. Margin loans are open-ended but subject to rapid liquidation in adverse markets.

• Suitability for Property Finance: SBL is increasingly used to fund deposits, acquisitions, or bridging needs. Margin loans are unsuitable for property transactions as funds are tied to reinvestment.

Why SBL Works for Property, But Margin Loans Don’t

For clients seeking to finance property, SBL is the obvious choice. It provides liquidity that can be applied directly to acquisitions, bridging transactions, or refinancing strategies. In a market where buyers need to act quickly, SBL allows a client to step forward as a cash purchaser, much like bridging finance, but secured on securities rather than property.

Margin loans, in contrast, are unsuitable. They are designed to increase market exposure, not to support external purchases. Attempting to use them for property finance could breach facility terms and expose the borrower to rapid liquidation risk.

A Practical Example

Imagine two clients, both with £5 million portfolios.

• Client A uses SBL to unlock £3 million at 60 percent LTV. They purchase a prime London property, while their portfolio remains invested. Within a year, they refinance into a large mortgage loan, repaying the SBL in full.

• Client B uses a margin loan to release £3 million. However, their lender only permits the funds to be reinvested into equities. When markets fall, their portfolio value drops to £4 million, breaching LTV covenants. The lender liquidates positions at a loss, leaving Client B without the liquidity they expected.

The lesson is clear: SBL provides flexibility and preserves strategic control, while margin loans are designed only for leveraged investment.

Risks and Considerations in 2025

While SBL is the superior choice for property finance, it is not without risk. Borrowers must understand the potential for margin calls if portfolio values fall. They should also recognise that not all securities qualify as collateral — illiquid or highly concentrated positions may reduce borrowing capacity.

Margin loans carry even greater risk. In volatile markets, they can magnify losses and lead to forced sales at unfavourable times. For this reason, margin loans remain a specialist tool for active traders rather than a mainstream solution for wealthy families.

How HNW Clients Are Using SBL in 2025

In 2025, SBL has become a cornerstone of high-net-worth property finance strategies. International buyers use it to sidestep challenges with foreign income verification, much like those discussed in expat mortgage solutions. Developers are using it to cover early-stage project costs while arranging development finance.

Ultra-high-net-worth clients are also integrating SBL into wider wealth planning, alongside trust and estate finance. Used strategically, SBL offers liquidity, discretion, and speed that few other facilities can match.

How Willow Can Help

At Willow Private Finance, we specialise in structuring securities backed lending facilities for property finance. Our team works with private banks, investment banks, and boutique lenders to source competitive terms and align facilities with long-term wealth strategies.

We also guide clients through the decision-making process. Where a margin loan may be presented by an investment bank, we ensure clients understand its risks and limitations. Where SBL is the appropriate solution, we structure facilities that protect portfolios while unlocking liquidity at speed.

Whether you are purchasing prime property, funding a deposit, or managing complex cross-border wealth structures, Willow can help design the right solution.

Frequently Asked Questions

What is the fundamental difference between SBL and a margin loan?
Securities Backed Lending (SBL) is a credit facility secured against a portfolio, but with broad permitted use of proceeds (e.g. property acquisitions, business funding) and more measured structuring. Margin loans, by contrast, require the borrowed funds to be reinvested in securities and are much more aggressive in risk profile. Willow Private Finance

Why is SBL more suitable for property finance than margin loans?
Because SBL allows liquidity to be applied to property deals (e.g. deposits or acquisitions). Margin loans usually prohibit external uses — they are designed to amplify exposure within financial markets, not fund external investments. Willow Private Finance

How do their risk profiles differ?
Margin loans carry higher volatility risk — if the underlying portfolio declines, automatic margin calls or forced liquidations can occur very quickly. SBL is structured more conservatively, with lower LTV caps and more buffers to protect against sudden declines. Willow Private Finance

What repayment terms and flexibility do each offer?
SBL tends to be structured as interest-only or bullet loans with set maturities (often 1–3 years). Margin loans are more open-ended but also more susceptible to sudden liquidation if collateral values shift. Willow Private Finance

What are the dangers of using a margin loan in a volatile market?
Because margin loans are very reactive to portfolio value drops, a sudden market downturn can trigger forced sales of securities at depressed prices, which can compound losses. Willow Private Finance



Can SBL and margin loans coexist in the same client strategy?
Yes — but their use cases should be clearly separated. SBL is better for liquidity and strategic investment or property needs; margin loans are more about leveraged investing within markets. Overlapping them without clear discipline may introduce undue risk. Willow Private Finance

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