Lombard Loans
If your wealth is spread across a mixed portfolio – equities, bonds, funds, and other assets rather than shares alone – a Lombard loan lets you borrow against the whole portfolio in a single facility, rather than needing separate arrangements for each asset type.
At a Glance
| Typical minimum | Historically reserved for private banking clients, often from around £250,000, though access is broadening to wealth management clients too |
| Loan-to-value | Commonly 50-70% against blue-chip equities and government bonds; less liquid or concentrated holdings attract lower rates |
| Typical rate structure | Often quoted as a margin over SONIA (the Sterling Overnight Index Average), commonly SONIA plus 2-3%, on a floating-rate basis |
| Repayment structure | Interest-only with the principal typically repaid at maturity |
| Eligible collateral | Listed equities, government and corporate bonds, funds, and in some cases digital assets |
| Regulatory status | Generally unregulated borrowing in the UK |
A Lombard loan is secured lending against your total investment portfolio, pledged together rather than a single asset class alone. You retain ownership throughout, continuing to receive dividends and coupon payments, while the lender holds a lien over the portfolio for the loan term.
How Loan-to-Value Is Assessed by Asset Class
Rather than a single blanket figure, each component of your portfolio is assessed on its own merits before a blended LTV is calculated. Blue-chip equities and government bonds generally support the strongest terms, commonly in the 50-70% range, given their liquidity and lower volatility. Smaller-cap or less liquid holdings, alternative investments, and concentrated single-stock positions are assessed more cautiously, typically attracting a meaningfully lower advance rate. A genuinely diversified portfolio generally supports a stronger overall LTV than a concentrated one, since the blended risk is lower.
A Worked Example
Consider an entrepreneur with a £5 million discretionary portfolio of equities, bonds, and unitised funds at a private bank, looking to purchase a £2 million commercial property through a holding company to expand their business. Structured as a 5-year term loan, £3 million of investment-grade bonds and equity funds are pledged as collateral at a blended 60% loan-to-value, producing a £1.5 million facility priced at SONIA plus around 2.25%, floating. The remaining £500,000 of the purchase is funded from the entrepreneur’s own equity, with the wider portfolio’s equity holdings left genuinely untouched and continuing to grow. This kind of structure is illustrative only; every case is assessed individually against your specific portfolio and objectives.
How a Lombard Loan Differs From a Stock Loan
A stock loan is limited to listed equities. A Lombard loan accepts a broader mix – bonds, funds, and other holdings pledged alongside equities as one facility. If your portfolio is equity-only, our Stock Loans page may offer more competitive pricing; if your wealth is genuinely diversified, a Lombard facility lets you use the whole picture as collateral.
How a Lombard Loan Differs From a Margin Loan
This is a genuinely important distinction many borrowers aren’t clear on. Margin loans are typically provided by brokerage trading platforms, structured on a standardised basis with stricter margin requirements and less flexibility, and are commonly used for shorter-term, trading-focused strategies. A Lombard loan, by contrast, is arranged through a private bank or wealth manager as part of your wider borrowing relationship, structured bespoke to your specific portfolio and objectives, with genuinely more flexibility around repayment and long-term portfolio management. If your need is a trading facility, a margin loan from your existing broker may be simpler; if you’re raising capital for a property purchase, business need, or other significant objective, a Lombard structure is generally the more appropriate route.
Offshore Custody: A Genuinely Relevant Option for International Clients
Some lenders offer an offshore custody arrangement, where a Lombard facility is provided against assets held in an offshore location such as Jersey or another Channel Islands jurisdiction, rather than requiring your portfolio to sit with a UK-based custodian. This is worth understanding if your wealth is already held internationally, or if you’re based overseas yourself, since it can avoid an otherwise unnecessary transfer of custody purely to access UK-arranged lending.
How Pricing Works
Pricing on a Lombard facility reflects the lender’s cost of funds plus their assessment of your specific portfolio risk, commonly quoted as a margin over SONIA on a floating-rate basis, and varies considerably by lender, portfolio composition, and prevailing market conditions. Rather than quoting a generic rate here, we’ll provide an accurate, current indication once we understand your specific portfolio and circumstances.
Margin Calls and Managing the Risk
Because portfolio value moves daily, lenders set a minimum coverage threshold throughout the facility. If your pledged portfolio falls below that threshold, you’ll typically need to pledge further assets, add cash, or repay part of the loan to restore coverage – exact thresholds and response timelines vary by lender, so it’s worth understanding your specific facility’s terms clearly before borrowing. Practical ways to manage this risk include borrowing meaningfully below your maximum available LTV, keeping the pledged portfolio genuinely diversified rather than concentrated, and holding a separate cash reserve you could deploy quickly if a call were triggered.
What Lombard Loan Proceeds Are Typically Used For
Since Lombard lending is generally unregulated, proceeds can usually be used broadly – a UK property purchase or deposit, business capital, covering a tax liability without an untimely disposal, or bridging a short-term liquidity need. Some lenders restrict using proceeds to buy further listed securities; worth confirming with your broker if that’s part of your plan.
Related Securities Lending Products
If your portfolio includes digital assets alongside conventional holdings, our Crypto-Backed Loans page covers borrowing against Bitcoin, Ethereum, and other major cryptocurrencies specifically. If you or a family member hold significant equity in a private company, our Pre-IPO Loans and Unlisted Stock Loans pages cover borrowing against that kind of holding, worth considering alongside a Lombard facility if your total wealth spans both listed and private company equity.
Lombard Loans Compared With Other Routes
| Lombard Loan | Stock Loan | Margin Loan | Second Charge (Property) | |
| Collateral | Diversified portfolio | Listed equities only | Brokerage account holdings | UK property equity |
| Typical LTV | 50-70% | 50-80% | Varies by platform, often lower | Up to 95% combined |
| Structure | Bespoke, private bank | Bespoke | Standardised, platform-set | Regulated or unregulated |
Tax Considerations
Pledging a portfolio for a Lombard loan isn’t itself a disposal for capital gains tax purposes – no CGT arises simply from borrowing. A disposal, and the resulting tax liability, only arises if pledged assets are later sold, whether voluntarily or through a margin call. We are lending specialists, not tax advisers, and it’s worth taking independent tax advice before proceeding.
Who Offers Lombard Lending
This is offered by private banks, the wealth management arms of major banking groups, and specialist institutional lenders, rather than high street banks. As an independent broker, we aren’t tied to a single provider, and you don’t need to be an existing private banking client to access a facility through us.
Our Process
- Initial consultation – we discuss your portfolio composition, funding requirement, and risk appetite
- Portfolio assessment and lender matching – we assess your holdings against lender criteria across our panel and identify realistic terms
- Term negotiation – we negotiate LTV, rate, and margin call thresholds on your behalf
- Documentation and custody arrangements – we manage the process between you, the lender, and the custodian
- Funding – once terms and documentation are finalised, funds are released to your account
Combining a Lombard Loan With Property Finance
Many clients use a Lombard facility alongside a conventional mortgage – for example, a mortgage covering part of a purchase price with a Lombard loan covering the remaining deposit. Our High Value Mortgages and Private Bank Mortgages pages cover the property finance side of this kind of combined structure.
Frequently Asked Questions
How is a Lombard loan different from a stock loan?
A stock loan is secured against listed equities specifically; a Lombard loan accepts a broader mix of equities, bonds, funds, and other assets pledged together as one facility.
What’s the difference between a Lombard loan and a margin loan?
A margin loan is a standardised facility provided by a brokerage platform, typically for shorter-term trading needs; a Lombard loan is a bespoke facility arranged through a private bank, structured around your wider portfolio and objectives.
What loan-to-value can I expect?
Commonly 50-70% against blue-chip equities and government bonds, though this depends heavily on your specific portfolio composition and the individual lender.
How is a Lombard loan priced?
Commonly quoted as a margin over SONIA on a floating-rate basis, reflecting the lender’s cost of funds and their assessment of your portfolio risk – we’ll give you an accurate current indication once we understand your specific circumstances.
Can my portfolio be held offshore and still support a Lombard loan?
Often yes – some lenders offer offshore custody arrangements, worth exploring if your wealth is already held internationally rather than with a UK-based custodian.
What happens if my portfolio falls in value during the loan term?
You’ll typically face a margin call requiring you to restore the required coverage – exact thresholds vary by lender, so it’s worth understanding your specific facility’s terms before borrowing.
Is a Lombard loan regulated in the same way as a mortgage?
Generally no – it’s classified as unregulated borrowing in the UK, which is worth understanding clearly alongside independent financial advice.
Get in touch with details of your portfolio and funding requirements, and we’ll help you understand whether a Lombard loan is the right route for your circumstances.
