A client can have several million pounds invested and still face a property-liquidity problem. Their wealth is real, but it is invested rather than sitting as cash. A Lombard or securities-backed facility can potentially turn part of that portfolio into immediately usable liquidity without requiring an outright sale of the underlying investments.
This makes Lombard lending particularly relevant to HNW property buyers. The capital can potentially support a deposit, allow one property to be purchased before another is sold, provide short-term liquidity around a transaction or, for sufficiently substantial portfolios, fund a larger part of the acquisition.
The attraction is obvious. The client retains their investment portfolio while accessing capital from it.
The risk is equally important. Unlike a house, listed securities can change value every day. If the recognised collateral value falls sufficiently, the lender can require the borrower to add assets or repay borrowing, and ultimately may have contractual rights to sell investments.
For that reason, the question is not simply “can my portfolio fund the property?” It is “what is the most robust way to use that portfolio alongside the rest of my balance sheet?”
The Core Principle
Lombard lending converts investment wealth into liquidity. It does not convert that liquidity into risk-free cash.
The investments remain exposed to markets while the loan remains outstanding. A good property-finance structure therefore needs to consider the portfolio, the borrowing, the property and the intended exit together.
- What is a Lombard loan?
- Why use Lombard lending for property?
- Using a portfolio to fund the property deposit
- Can Lombard lending make you a cash buyer?
- Can the full purchase price be financed?
- Combining Lombard lending with a mortgage
- How lenders assess the investment portfolio
- Do investments need to move to the lending bank?
- The principal risks
- Lombard loan, mortgage or bridge?
- How to structure the facility properly
What Is a Lombard Loan?
A Lombard loan is borrowing secured against eligible financial assets. Depending on the lender, collateral can include listed equities, investment funds, government and corporate bonds, cash and other acceptable securities.
Instead of selling those investments to create cash, the borrower pledges them to the lender. The bank assigns a lending value to the portfolio and provides a facility against that collateral.
The lending value is lower than the headline market value of the investments because the bank applies discounts, often referred to as haircuts, to reflect volatility, liquidity, concentration and other risks.
A £5m portfolio therefore does not automatically support £5m of borrowing. Nor will every £5m portfolio support the same facility.
A diversified portfolio of liquid securities can receive a very different collateral assessment from £5m concentrated in one listed company, a small number of thematic funds or relatively illiquid assets.
Why Do HNW Clients Use Lombard Lending for Property?
The principal attraction is liquidity without an immediate sale of investments.
A client may have the cash economically available but prefer not to realise a portfolio at that particular moment. There may be investment, tax, market-timing or strategic reasons for retaining the assets, although each of those considerations should be discussed with the appropriate investment and tax advisers.
Lombard lending can potentially allow the property transaction to proceed while the investments remain in place.
None of these benefits automatically means Lombard lending is preferable to a mortgage. They simply create another source of liquidity that can be compared with property-backed finance.
Can a Lombard Loan Fund a UK Property Deposit?
Potentially, and this is one of the most intuitive ways to use securities-backed borrowing in a property transaction.
Imagine a client wants to buy a £5m property and intends to finance £3m through a mortgage. They therefore need £2m of equity before accounting for transaction costs.
The client owns a substantial liquid investment portfolio but does not want to sell £2m of it purely to create the deposit.
A Lombard facility could potentially provide some or all of that £2m against eligible portfolio assets, leaving the mortgage secured against the property and the Lombard loan separately secured against the investment portfolio.
£5m Property With £3m Mortgage and Portfolio-Backed Equity
Assume a HNW buyer has a sufficiently substantial eligible investment portfolio and wants to acquire a £5m UK home.
Rather than sell £2m of investments, they might explore a £2m securities-backed facility alongside a £3m property mortgage.
Economically, the buyer has borrowed the full £5m purchase price across two different pools of collateral. The mortgage is secured against the property; the Lombard facility is secured against the investments.
That can preserve cash and investments, but it also means the client has substantially increased total leverage. The investment-backed facility still needs sufficient collateral headroom and a credible repayment strategy.
The Mortgage Lender Still Needs to Understand the Deposit
Using borrowed funds for the equity contribution does not mean the separate mortgage application can ignore that borrowing.
Where a mortgage is part of the structure, the mortgage lender will generally need an accurate picture of the client's liabilities and the source of funds being introduced into the purchase.
Whether a particular combination is acceptable depends on the mortgage lender, the securities-backed lender, the nature of the property and the client's overall financial position.
The structure should therefore be designed before either facility is committed, rather than arranging the Lombard loan first and assuming the mortgage lender will automatically accept it later.
Can Lombard Lending Allow a Client to Act as a Cash Buyer?
Potentially.
For a client with sufficient eligible investments, portfolio-backed liquidity may provide enough capital to complete a property purchase without waiting for a conventional mortgage to complete.
This can be useful where the buyer wants speed or completion certainty. A later mortgage or another liquidity event may then repay some or all of the portfolio facility.
The concept resembles bridging finance in one important respect: the initial borrowing solves a timing problem, while another event provides the eventual repayment.
The risk profile is different, however. A property bridge is primarily exposed to property and exit risk. A Lombard facility is also exposed to changes in the value and lending value of the securities securing it.
Being a “Cash Buyer” Does Not Mean the Purchase Is Unleveraged
From the seller's perspective, a purchaser using a Lombard facility may be able to complete without relying on a simultaneous property mortgage.
From the buyer's balance-sheet perspective, however, the property has still been purchased with borrowed money. The leverage has simply been placed against the investment portfolio rather than the house.
Buy First, Mortgage Later
One possible HNW strategy is to use securities-backed liquidity for a time-sensitive acquisition and then refinance onto longer-term property debt after completion.
This can be relevant where the client's long-term preference is a mortgage but the acquisition timetable does not allow the mortgage process to dictate the completion date.
The strategy should not assume that the later mortgage is guaranteed.
Before using Lombard borrowing as temporary acquisition finance, the long-term refinancing position should be assessed against expected income, property value, lender criteria and the borrower's circumstances.
If the expected mortgage cannot subsequently be arranged, the Lombard facility may remain outstanding for much longer than intended, exposing the client to additional market and collateral risk.
Can Lombard Lending Create 100% Property Finance?
In some HNW structures, borrowed funds can potentially cover the entire property purchase price.
That can happen where a sufficiently large securities-backed facility finances the purchase outright, or where a mortgage and portfolio-backed facility together provide the required consideration.
But “100% finance” can be misleading if interpreted as meaning the client has no equity at risk.
The lender providing the Lombard facility is relying on the client's investments. The client therefore already has substantial wealth exposed as collateral. If the portfolio declines, more capital or assets may need to support the facility.
Likewise, combining a property mortgage and Lombard facility means the client has leverage against two parts of their balance sheet simultaneously.
This can be commercially rational for an appropriately capitalised HNW borrower, but it should be viewed as a balance-sheet strategy rather than simply a way to buy property “with no deposit”.
100% of the Purchase Price Financed Does Not Mean 100% LTV
The property mortgage may sit at a conservative LTV while a completely separate investment portfolio provides collateral for the remainder.
The relevant risk calculation therefore needs to consider total liabilities against total available assets, not simply the mortgage LTV shown against the property.
Combining a Lombard Loan With a Mortgage
For many clients, the choice is not Lombard lending or a mortgage. The stronger structure can involve both.
A mortgage can provide long-term finance secured against the property, while the Lombard facility supplies a more flexible pool of liquidity against investments.
This can allow the client to control where leverage sits across the balance sheet.
| Structure | Potential Use | Key Risk |
|---|---|---|
| Mortgage only | Long-term property finance where conventional affordability and timing work. | Property-backed debt, interest cost and potential early repayment restrictions. |
| Lombard only | Portfolio-backed liquidity where the available securities comfortably support the requirement. | Investment values, collateral haircuts, margin calls and lender repayment rights. |
| Mortgage + Lombard | Preserve cash or investments while splitting borrowing across property and securities. | Greater total leverage across two separate asset pools. |
| Lombard then mortgage | Time-sensitive acquisition followed by longer-term refinancing. | The intended refinance may be delayed or unavailable. |
| Property bridge | Short-term acquisition or chain-break finance where property is the preferred collateral. | Higher short-term costs and reliance on a defined property or refinance exit. |
Why the Cheapest Rate Should Not Decide the Structure
The relevant comparison is much broader than the headline margin charged by a lender.
A mortgage can be relatively stable because the lender does not generally recalculate the property value every trading day. A Lombard loan can be more flexible but is exposed to continuously changing financial-market collateral.
Bridging finance may cost more but avoid placing an investment portfolio at risk. A private-bank mortgage may offer flexibility but require a broader relationship. Another Lombard lender may accept a portfolio managed elsewhere rather than requiring a full investment transfer.
The right structure depends on duration, collateral, flexibility, risk and the client's intended exit as much as the starting interest rate.
How Does a Private Bank Assess a Portfolio for Lombard Lending?
The headline portfolio value is only the starting point.
The lender considers what the portfolio contains, how easily those assets can be sold, how volatile they are, whether they are concentrated and how they behave together under stress.
Each eligible holding receives a recognised lending value rather than simply being taken at full market value.
This is why two clients each holding £5m of investments may receive very different lending propositions.
Liquidity
Listed securities with deep and active markets can generally be easier for a lender to accept as collateral than investments whose market value is difficult to establish or which cannot be realised quickly.
Volatility
Assets capable of moving significantly over short periods normally require greater lender protection. The higher the expected volatility, the lower the borrowing capacity may be relative to headline portfolio value.
Concentration
A portfolio dominated by one company, one investment theme or closely correlated holdings can create greater collateral risk than a broadly diversified portfolio.
This is particularly relevant to entrepreneurs whose wealth is concentrated in shares connected with the business that created their wealth.
Currency
If the portfolio and loan are in different currencies, foreign-exchange movements can change the effective collateral position.
A US-dollar portfolio supporting sterling borrowing can therefore experience a collateral change even if the securities themselves are unchanged in dollar terms.
Market Value Is Not the Same as Lending Value
This distinction is fundamental.
If a client's portfolio is worth £10m, the bank may recognise only part of that £10m for lending purposes after applying its collateral rules.
The unused lending capacity then acts as part of the buffer protecting the facility against normal market movements.
Borrowing the maximum amount the portfolio can technically support therefore produces a different risk profile from drawing significantly less.
Maximum Available Credit Is Not Necessarily the Right Drawdown
Suppose a portfolio supports £3m of lending under a particular bank's current collateral methodology.
Drawing the entire £3m leaves substantially less capacity to absorb declining asset values or changes in lending values than drawing £1.5m.
The client may be approved for the larger facility, but that does not mean using every pound of it creates the strongest property-finance structure.
Do You Have to Move Your Investments to the Lending Bank?
Not necessarily.
Some Lombard propositions form part of a wider private-banking or investment-management relationship, and the bank may expect the assets used as security to sit within an agreed custody or investment arrangement.
However, the market is not uniform.
Weatherbys Private Bank has specifically highlighted its ability to consider suitable portfolios managed by other investment managers or custodians. That can be significant for clients who want liquidity but do not want the borrowing requirement to disrupt an established wealth-management relationship.
Other lenders have their own custody and management requirements.
This means the cost of a Lombard facility should not be judged only from its lending margin. If arranging the loan requires a substantial portfolio to move from an existing manager, the implications for investment management, custody, fees and the wider adviser relationship also need to be considered.
Can Your Existing Wealth Manager Stay Involved?
Potentially, depending on the lender structure.
This can be particularly important where the portfolio has been managed around a long-term strategy and the property purchase is only a temporary liquidity event.
The objective should not be to alter an investment strategy simply because a lender prefers a particular collateral composition unless the investment consequences have been considered by the appropriate adviser.
Willow's role is on the borrowing side. Investment allocation and suitability remain matters for the client's investment professional.
What Are the Main Risks of Using Lombard Lending for Property?
The same feature that makes a Lombard loan attractive also creates its principal risk: the collateral remains invested.
Its value can therefore fall while the borrowing remains outstanding.
Margin Calls
If the lending value of pledged assets becomes insufficient relative to the amount borrowed, the lender can require the position to be restored.
Depending on the facility, the client may need to add eligible collateral, contribute cash or reduce the loan balance.
If that does not happen within the required terms, the lender can have rights to sell investments.
Forced Sale Risk
A forced sale can occur precisely when the borrower would personally prefer not to sell.
If financial markets have fallen substantially, selling pledged investments to reduce the loan can crystallise losses and remove the client's ability to participate fully in a subsequent recovery.
This is why maintaining adequate collateral headroom matters.
On-Demand Repayment
Some portfolio-lending facilities can be repayable on demand.
Investec, for example, states that its portfolio loans are on-demand loans and that it can require immediate repayment irrespective of portfolio value.
That is lender-specific, but it demonstrates why a client should understand the contractual repayment terms rather than assume every securities-backed facility behaves like a conventional long-term mortgage.
Floating Interest Costs
Lombard pricing can be linked to a reference or policy rate plus a lender margin, which means the cost can change while the facility remains outstanding.
The client should therefore stress-test the borrowing at higher interest costs rather than assume today's rate continues indefinitely.
Currency Risk
Where collateral and borrowing sit in different currencies, exchange-rate changes can contribute to a collateral shortfall.
International HNW clients should therefore examine currency exposure alongside the underlying investment risk.
Refinance Risk
If the facility is being used temporarily before a mortgage, property sale, business sale or another liquidity event, that intended exit may take longer than expected.
The structure needs to remain manageable during the delay.
The Property Can Be Stable While the Financing Becomes Unstable
This is one of the most important differences between portfolio-backed and property-backed borrowing.
The house does not need to fall in value for a Lombard problem to arise.
A client may purchase an excellent £5m property that retains its value while an unrelated decline in financial markets causes the securities supporting the loan to fall.
The property investment can therefore be performing perfectly well while the liability used to finance it requires attention.
How Can the Risk Be Reduced?
Risk cannot be removed entirely, but several structural decisions can make the facility more resilient.
A More Conservative Lombard Structure Can Include
- borrowing materially below the maximum available lending value;
- understanding exactly which assets provide the collateral capacity;
- avoiding excessive dependence on one volatile holding;
- considering currency mismatch before the loan is drawn;
- retaining liquidity outside the pledged portfolio;
- stress-testing a substantial portfolio decline;
- understanding the lender's margin-call and close-out mechanics;
- confirming whether the loan can be called on demand;
- having a clearly defined repayment strategy; and
- reviewing the facility if the intended repayment event is delayed.
Maintaining Liquidity Outside the Portfolio
A margin call becomes more difficult if every available asset is already pledged.
For this reason, some borrowers deliberately retain separate liquidity that can be mobilised if market conditions deteriorate.
The appropriate amount depends on the facility, portfolio and wider financial position. There is no universal cash-buffer percentage that makes a Lombard loan safe.
The important question is whether the borrower can realistically restore the collateral position without being forced to sell the investments or property at an unattractive time.
Lombard Loan, Mortgage or Bridging Finance?
HNW clients frequently have more than one way to fund the same transaction.
A £1m liquidity requirement could potentially be met by increasing a property mortgage, raising money against another property, using bridging finance or borrowing against investments.
Each puts risk in a different part of the balance sheet.
| Issue | Mortgage | Lombard Loan | Bridging Finance |
|---|---|---|---|
| Primary collateral | Property | Investment portfolio | Property |
| Typical role | Longer-term finance | Flexible portfolio-backed liquidity | Short-term transaction finance |
| Collateral volatility | Not continuously marked to market | Market-priced investments | Property valuation and exit risk |
| Key structural risk | Affordability, rate and property security | Margin calls, collateral changes and repayment rights | Cost and failure of the planned exit |
| Best use depends on | Income, property, LTV and term | Portfolio, liquidity, buffer and duration | Timescale, property and exit strategy |
The table simplifies three very different lending markets, but it illustrates why the headline rate alone cannot determine which one is most appropriate.
Example: £1.5m Required for Six Months
Consider a HNW buyer who requires £1.5m to complete a property purchase while another property is being sold.
They have a substantial investment portfolio and significant equity in their existing home.
The obvious options could include a bridge against property, portfolio-backed borrowing or a larger conventional mortgage.
The Lombard route may preserve property flexibility and potentially complete quickly. But if the property sale takes twelve months instead of six, the portfolio remains exposed to market risk throughout that additional period.
The property bridge may avoid exposing the investment portfolio but could carry a higher borrowing cost.
A conventional mortgage might provide longer-term certainty but could take longer to arrange or create early repayment considerations once the sale completes.
There is no universally correct answer. The correct decision depends on which risk the client is most comfortable accepting and how robust the exit is.
How Should a Lombard Property-Finance Facility Be Structured?
The strongest starting point is the liquidity requirement rather than the maximum amount available against the investments.
How much does the client actually need? Why do they need it? How long will it remain outstanding? What event is expected to repay it?
Only after answering those questions should the portfolio's borrowing capacity be considered.
1. Define the Purpose
Is the facility funding a deposit, an entire acquisition, a temporary gap before property sale or part of a wider property and investment strategy?
The purpose determines the expected duration and the alternative finance routes that should be compared.
2. Establish the Exit
If the Lombard borrowing will be repaid by a mortgage, establish whether that mortgage appears achievable before the property purchase completes.
If repayment relies on the sale of another property, stress-test what happens if that sale takes longer or produces less capital than expected.
If a business sale, bonus or other liquidity event is expected, consider the certainty and timing of that event.
3. Review the Portfolio
Understand the assets, diversification, currencies and lending values that will support the facility.
The client's investment adviser should remain involved where collateral requirements might interact with investment strategy.
4. Decide How Much Headroom to Retain
The lender's maximum facility is not automatically the client's appropriate facility.
A lower drawdown can materially increase the amount of market movement the portfolio can absorb before the borrower needs to act.
5. Keep the Alternatives Open
The facility should be compared with mortgages, bridging and other available borrowing rather than considered in isolation.
A blended solution can sometimes create a more resilient result than placing the entire requirement against one pool of collateral.
Questions to Ask Before Using a Lombard Loan for Property
Before Drawing the Facility, Establish:
- which investments are eligible as collateral;
- their current recognised lending values;
- whether those lending values can change;
- how concentrated the portfolio is;
- whether borrowing and collateral sit in different currencies;
- what the lender defines as a margin call;
- how quickly a shortfall must be rectified;
- whether the lender can sell investments;
- whether the facility is repayable on demand;
- what liquidity remains outside the pledged portfolio;
- whether the property mortgage lender accepts the wider structure;
- how the facility is expected to be repaid;
- what happens if repayment is delayed; and
- how the Lombard option compares with property-backed alternatives.
How Willow Private Finance Approaches Lombard Property Lending
At Willow Private Finance, we treat Lombard lending as one part of the client's liability structure rather than as a standalone product.
If a client needs £500,000, £1m or several million pounds for a UK property transaction and already holds substantial investment assets, the first question is not simply how much a private bank will lend against the portfolio.
We assess why the liquidity is required, how long the borrowing is expected to remain outstanding, what property-backed alternatives exist and what event is intended to repay the facility.
The comparison can include conventional large mortgages, private-bank property lending, bridging, borrowing against other property and securities-backed options.
Where the client already has a wealth manager or investment adviser, we can work alongside that relationship. Investment strategy remains with the investment professional; our role is to establish how borrowing against the portfolio compares with the other sources of property finance available.
Have Investments but Need Liquidity for a UK Property Purchase?
Selling investments is not always the only way to create a property deposit or complete a time-sensitive acquisition. A suitable portfolio may provide another source of liquidity.
Willow Private Finance can compare Lombard lending with mortgages, private-bank finance and bridging so that the structure is considered across the client's complete balance sheet rather than one asset at a time.
Explore Lombard Lending →Frequently Asked Questions
Lombard lending can provide substantial flexibility for HNW property transactions, but the portfolio remains market-exposed throughout the borrowing period.
Can a Lombard loan be used to buy UK property?
Potentially. Securities-backed borrowing can provide liquidity against eligible investment assets and may be used for property-related purposes where the lender permits it. The permitted use, borrower eligibility and regulatory treatment depend on the specific lender and transaction.
Can a Lombard loan be used for a property deposit?
Potentially. An eligible borrower may be able to raise liquidity against an investment portfolio and use that capital as part of a property purchase. Where a separate mortgage is also required, the mortgage lender needs to understand the source of deposit and the borrower's wider liabilities.
Can Lombard lending provide 100% finance for a property purchase?
In some HNW transactions the full purchase price can potentially be financed through a combination of separately secured facilities, such as property-backed and securities-backed borrowing, or through a sufficiently large portfolio-backed facility. This does not remove the client's economic leverage and can materially increase risk.
What happens if the investment portfolio falls after taking a Lombard loan?
If the recognised collateral value falls sufficiently, the lender may require additional collateral or a reduction in the borrowing. If the shortfall is not corrected, the lender may have the right to sell pledged investments. The exact margin-call and close-out provisions are lender-specific.
Is a Lombard loan better than a mortgage for buying property?
Not automatically. A Lombard facility can offer liquidity without an immediate sale of investments, but it introduces portfolio-value, margin-call and potentially on-demand repayment risk. Mortgages, bridging and securities-backed borrowing should be compared according to cost, duration, security, risk and the intended repayment strategy.