A substantial investment portfolio can provide another route to financing a property purchase. Securities-backed lending allows eligible investments to support borrowing without an immediate sale, but it connects the purchase to the performance of those investments and the lender's continuing collateral requirements. [1] [4]
For a buyer whose wealth is spread across investments, property and business interests, the financing question is not simply how much a mortgage lender will advance. It is which assets should support the purchase, how borrowing will be repaid and whether the arrangement fits the wider wealth plan. Selling investments, arranging a mortgage and borrowing against a portfolio can produce very different outcomes.
Securities-backed lending, or SBL, can be considered for an outright purchase, a deposit or a temporary funding gap before another source of capital becomes available. The central trade-off remains the same: retaining investments is not the same as protecting them from loss, and speed should never replace a credible repayment plan.
Securities-Backed Property Finance: The Essential Distinction
The purpose of the loan and its security are different things. Money may be used to buy property while the lender takes security over an investment portfolio. That is different from a conventional mortgage secured on the property itself. The documents must establish exactly which assets are pledged. [1] [4]
The investments remain exposed to market movements. A fall in their value can require additional collateral or repayment, and failure to meet the lender's requirements can result in investments being sold. [1]
Available borrowing is not simply a percentage of total wealth. Eligibility, portfolio composition and the lender's assessment determine what can support the facility. [4]
Why Securities-Backed Lending Can Work for Property Finance
The attraction is the ability to separate a property decision from an immediate investment-sale decision. A buyer may wish to keep a diversified portfolio intact while acquiring a home, or need temporary liquidity before a planned capital receipt. Coutts describes investment-backed borrowing as a way to access funds while remaining invested, including for property-related needs. That flexibility can be useful, but it is not evidence that borrowing is always preferable to selling. [2]
The distinction between an existing facility and a new application is particularly important. Drawing from an established, available credit line may be quick; obtaining approval, completing documentation and arranging security for the first time is a different process. A buyer should establish when funds can actually be drawn before making a commitment that depends on them. [2]
Retaining investments also means retaining their downside. The comparison should include the cost of interest and fees, the effect of a market fall and the resources available outside the pledged portfolio. An arrangement that relies on investment returns exceeding borrowing costs has a different risk profile from one supported by a separate, dependable repayment source. [1]
How SBL Is Used in Property Transactions
Funding an outright purchase
Subject to the lender permitting the use, a securities-backed facility can contribute to or fully fund a purchase without a mortgage over the property. Weatherbys identifies property purchases as a potential use of portfolio-backed borrowing. The buyer is nevertheless using debt: funds arriving in cash do not make them unborrowed funds. The solicitor should be given a clear account of the funding source and the relevant documentation. [4]
Providing a deposit or short-term bridge
A facility may fund a deposit alongside a mortgage, or support a purchase while longer-term finance is arranged. A borrowed deposit must be disclosed and accepted by the mortgage lender. It should not be presented as savings or an unconditional gift. Nationwide's published deposit criteria illustrate why acceptance cannot be assumed: some forms of borrowing are accepted, while others are excluded. [5]
The proposed mortgage and the securities-backed borrowing therefore need to be considered together. Before exchanging contracts, establish the mortgage lender's position on the deposit, the additional debt and any intended refinancing. A securities-backed lender's willingness to advance money is not confirmation that the property lender will accept the overall arrangement.
Integrating with a wider property portfolio
For a landlord or developer, investment-backed borrowing may serve as temporary acquisition capital while another asset is sold or refinanced. Rathbones includes property purchases, development and refinancing among potential uses of its portfolio lending. Permitted purposes remain lender-specific; an acquisition facility should not be assumed to cover subsequent building works. [3]
The useful comparison is with the alternatives, including property-backed bridging finance. Which security should be committed, what happens if the exit is delayed, and which structure leaves the borrower better able to manage an unexpected funding requirement?
What Determines How Much You Can Borrow?
The starting point is the actual investment schedule, not an estimate of net worth. UBS identifies eligible equities, investment funds, bonds and deposits as examples of potential collateral. A lender must then decide which holdings it accepts and the borrowing they support; no single advance rate applies to every portfolio. [1]
A useful initial review separates four questions. Together they establish whether a headline portfolio valuation can translate into an appropriate lending proposal, rather than treating every pound of investments as equally lendable.
SBL should not be described as a universal route around lending checks. Rathbones expressly refers to affordability checks and annual reviews. The review must establish the proposed lender's requirements for financial information, eligibility and repayment, rather than assume that a valuable portfolio makes those questions irrelevant. [3]
International Portfolios and Existing Wealth Managers
An international buyer should not assume that an overseas investment account can automatically support a UK purchase. The proposed borrower, residence, ownership structure, location of the assets and lending entity all need to be considered. HSBC's lending information makes clear that availability depends on jurisdiction. A trust or company also needs the authority to enter the proposed borrowing and security arrangements; Rathbones highlights governing-document requirements for such borrowers. [3] [7]
Nor should retaining investments be confused with retaining the same custody arrangements. Some propositions depend on assets held with the lending institution or its investment business; others can consider external portfolios. Weatherbys, for example, says investments held elsewhere may be considered subject to review. Establish the position with the lender and wealth manager before assuming that assets can stay where they are. [3] [4]
Illustrative Example: A £4m London Property Purchase
Consider a hypothetical Middle Eastern buyer with a £10m investment portfolio who wishes to buy a £4m London apartment. Assume an appropriate lender approves £3m of securities-backed borrowing and the buyer provides £1m of separate cash. Property taxes, legal costs, financing fees and a liquidity reserve would need to be funded in addition.
| Illustrative item | Amount or treatment |
|---|---|
| Investment portfolio market value | £10m |
| Property purchase price | £4m |
| Securities-backed borrowing drawn | £3m |
| Borrowing / portfolio market value | 30%: £3m divided by £10m |
| Separate cash for the purchase price | £1m, with taxes, costs and reserves funded separately |
This is a simplified illustration, not a completed Willow case, a lending offer or an indication that the portfolio would qualify. The 30% ratio compares drawn debt with total portfolio market value; the lender's eligible collateral value and contractual borrowing limit may be different.
The buyer might intend to repay the facility from a later mortgage. That exit would need separate assessment. A lower valuation, a smaller mortgage offer or a delay could leave part of the securities-backed debt outstanding. The plan should therefore identify how interest and any collateral shortfall would be covered while the mortgage is arranged, and what happens if it is not available.
The Question Is Not Only Whether the Portfolio Can Support the Purchase
It is whether the buyer can still manage the borrowing after completion if investments fall or refinancing takes longer than expected. Assess the purchase funds, accessible reserves and repayment route together through a securities-backed lending review.
The Risks Borrowers Need to Understand
Market falls and margin calls
Using the illustration above, a fall in portfolio value from £10m to £8m would increase the ratio of £3m borrowing to market value from 30% to 37.5%, before interest or other changes. That calculation does not establish when a margin call would occur: the trigger depends on the contractual collateral rules. It does show why the original ratio is not permanent.
When collateral becomes insufficient, a lender may require more security or repayment. Investments may be sold if the requirement is not met, as UBS's risk warning explains. A property bought with the proceeds cannot necessarily be sold quickly enough to resolve that problem. Retaining cash or other suitable resources outside the pledged portfolio should therefore be part of the discussion. [1]
Changing eligibility and repayment rights
A fixed portfolio value is not the only consideration. Some agreements allow changes to collateral eligibility or the amount of collateral required. FINRA's US guidance also highlights demand-loan features in securities-backed credit lines. These are reasons to examine the actual contract, not rules to assume apply identically to every UK or international facility. [8]
There is no universal one-to-three-year term for this type of borrowing. UBS describes both variable facilities and fixed-term advances. The borrower should distinguish the expected period of use from the lender's rights to require repayment, reduce availability or review the facility. A planned property sale next year does not solve a demand for cash much earlier. [1] [8]
Interest costs and currency exposure
The review should test higher borrowing costs where rates can vary, rather than assume the initial interest bill is permanent. Currency also matters when the property, debt, investments and repayment income are not all denominated in the same currency. UBS warns that interest-rate and currency changes can affect investment values and outcomes. A lower quoted rate in another currency is not, by itself, a sound reason to take that exposure. [1]
Tax Planning: Deferring a Sale Is Not Eliminating Tax
Keeping investments rather than selling them can postpone a disposal that might otherwise create a capital gains tax liability. HMRC confirms that gains on certain share and investment disposals can be taxable, subject to exemptions and the applicable rules. That does not make a securities-backed borrowing arrangement automatically tax-free or appropriate for every owner. [6]
Tax advisers should assess the actual ownership, residence, assets and proposed security structure. Property purchase taxes and the tax treatment of borrowing costs are separate questions. A later voluntary or forced sale may still have tax consequences; FINRA specifically highlights that risk for US securities-backed borrowers. Any advantage from retaining investments needs to be considered alongside borrowing costs and the risk of selling at a time the borrower did not choose. [6] [8]
When a Mortgage or Partial Sale May Be the Better Answer
The property objective should come before the product. A review may conclude that a residential mortgage is more appropriate, that a smaller securities-backed facility would leave a better collateral buffer, or that selling part of the investments would reduce an unacceptable repayment risk. Having several options is useful only when their consequences are compared.
For buyers with complex income, it is also worth assessing whether a specialist mortgage or private-bank mortgage can meet the requirement. The choice should not be reduced to selling investments or borrowing against them. Combining structures can be appropriate, but every layer of debt still needs an affordable cost and a credible exit.
A practical test is to ask whether the plan remains workable with weaker investments, a delayed property sale and no immediate refinancing. Where the answer depends on optimistic assumptions, the proposed borrowing should be reconsidered before the purchase commits the buyer to an illiquid asset.
How Willow Private Finance Can Help
Willow Private Finance assesses securities-backed lending within the wider property-finance requirement rather than treating it as the default answer. The starting point is the purchase, the borrower's assets and liabilities, the investment ownership and custody arrangements, available cash, timescale and repayment objectives.
We can compare relevant mortgage, bridging and portfolio-backed options and work alongside the client's wealth manager, accountant and legal advisers. Our role is to assess and arrange appropriate borrowing, while those advisers address investment suitability, tax treatment and legal structure. The objective is funding that fits the whole position, not simply the largest facility a portfolio might support.
Buying Property While Keeping an Investment Portfolio Intact?
Before pledging investments, establish what can support borrowing, how much collateral headroom remains and how the facility would be repaid if the planned mortgage or asset sale is delayed.
Willow can assess securities-backed lending alongside the alternatives and coordinate the financing discussion with your existing professional advisers.
Explore Securities-Backed Lending →Frequently Asked Questions
Practical questions about using investment portfolios to support a property purchase.
Can securities-backed lending be used to buy UK property?
Potentially, where the lender permits the proposed property purchase and the borrower and investments meet its requirements. Borrowing may fund all or part of the price, but the facility must be approved and available before it is relied on. It remains debt even when no mortgage is taken over the property.
[1] [4]How much can I borrow against an investment portfolio?
There is no universal percentage. The lender assesses eligible holdings, liquidity, concentration, ownership and its own lending limits. Total portfolio market value is not necessarily the same as eligible collateral value. A borrowing proposal should also leave an appropriate buffer for adverse movements rather than assume the maximum available facility is suitable.
[1] [4]Can securities-backed borrowing provide a mortgage deposit?
It may be possible, but the mortgage lender must know that the deposit is borrowed and accept the arrangement. The additional debt and its repayment obligations must be assessed alongside the mortgage. Do not assume that approval from the securities-backed lender establishes acceptance by the mortgage lender.
[5]Can an overseas portfolio remain with its existing wealth manager?
Sometimes, but neither cross-border eligibility nor external custody should be assumed. The lender must accept the borrower, jurisdiction, investments and security arrangements. Confirm whether the assets can remain with the existing custodian and how the proposed borrowing affects the wealth manager's mandate.
[4] [7]What happens if the pledged investments fall in value?
The lender may require additional collateral or repayment under the facility terms. If the requirement is not met, investments may be sold, potentially creating losses or tax consequences. Borrowers should understand the notice periods, maintain accessible resources and avoid relying solely on a property sale or an unapproved mortgage to resolve a shortfall.
[1] [8]