Stock Loans
If you hold a valuable portfolio of listed shares, you don’t necessarily need to sell to raise capital for a UK property purchase, a business opportunity, or any other significant financial need. A stock loan lets you borrow against your portfolio while remaining fully invested, avoiding a forced sale and the capital gains tax event that can come with it – and depending on how the facility is structured, it can also mean your personal assets beyond the pledged stock are never actually at risk.
At a Glance
| Loan-to-value | Typically 50-70% for listed equities, with top-tier blue-chip holdings sometimes supporting more; private or unlisted shares typically 15-45% given lower liquidity |
| Facility size | Commonly from around £250,000 up to £50 million or more for substantial portfolios |
| Eligible collateral | Listed equities on major exchanges, whether a diversified portfolio or a concentrated single-company position |
| Recourse structure | Available as both recourse and non-recourse, a genuinely important distinction covered in detail below |
| Typical completion timeline | Commonly 1-3 weeks once the portfolio and legal work are confirmed |
| Repayment structure | Commonly interest-only with the principal repaid at maturity |
| Regulatory status | Generally unregulated borrowing in the UK |
What a Stock Loan Actually Is
A stock loan involves pledging listed shares as collateral for a loan, rather than selling them to access cash. The lender takes custody of the shares for the loan term and offers a credit facility in return. You retain ownership throughout, continuing to benefit from dividends and any price appreciation, while the pledged stock secures the loan.
Recourse vs Non-Recourse: Why This Structural Choice Matters More Than the Rate
This is genuinely one of the most important decisions in structuring a stock loan, and it’s worth understanding properly before comparing headline rates alone. With a recourse loan, if the pledged stock falls short of covering the outstanding balance, the lender can pursue your other personal assets for the shortfall – the same basic principle as most conventional secured lending. With a non-recourse loan, the lender’s claim is limited entirely to the pledged shares themselves; if the stock’s value falls and the loan defaults, you can walk away, surrendering the shares, with no further personal liability at all.
A Real-World Illustration
Consider a company insider holding a substantial concentrated position in a single UK-listed stock, wanting liquidity without losing ownership, dividends, or voting rights ahead of an anticipated period of volatility. Structured on a non-recourse basis, if the share price later declined significantly, the borrower could simply walk away from the loan entirely, surrendering the pledged shares, with no obligation or risk to any other personal assets – a genuinely more favourable outcome than being forced to sell the stock outright at a depressed price to avoid a shortfall. This kind of structure is illustrative only; every case is assessed individually against your specific holding and circumstances.
Why Non-Recourse Typically Costs More
Given the lender is taking on genuinely more risk by giving up any claim beyond the collateral itself, non-recourse facilities are typically priced somewhat higher, and often set at a more conservative loan-to-value, than an equivalent recourse loan. It’s worth discussing both structures directly with your broker, since the right choice depends on how much you value the certainty of limited personal exposure against the marginally better terms a recourse structure can offer.
Diversified Portfolios Versus a Single Concentrated Position
A stock loan secured against a genuinely diversified portfolio of blue-chip, liquid shares is generally viewed more favourably by lenders than a facility concentrated in a single company, since the risk is spread rather than tied to one holding’s performance. A single stock loan – borrowing against shares in just one listed company – is a common and legitimate structure, particularly for founders, executives, or long-term holders with a large position in one business, but it’s typically assessed more cautiously and can attract a more conservative loan-to-value than an equivalent diversified facility.
Private and Unlisted Shares: A Genuinely Different Risk Profile
If your holding is in a private, venture-backed, or otherwise unlisted company rather than a stock traded on a public exchange, loan-to-value is typically considerably more conservative, commonly in the region of 15-45%, reflecting the genuine illiquidity and valuation uncertainty involved. Our Unlisted Stock Loans page covers this specific category in full detail, including the illiquidity discounts and considerably longer facility terms typically involved. Lenders in this space place particular weight on the company’s maturity, financial performance, and investor backing, and payment-in-kind structures, where interest accrues rather than being paid monthly, are commonly used to align repayment with a borrower’s actual cash flow position ahead of a future liquidity event.
How Loan-to-Value Actually Varies
Blue-chip, widely traded equities on major exchanges generally support the strongest terms, given their liquidity and lower volatility. More volatile or thinly traded stock is assessed more conservatively. Many borrowers also choose to borrow well below the maximum available loan-to-value deliberately, to reduce the risk of a margin call if the share price moves against them – it’s worth discussing your own risk tolerance openly with your broker rather than assuming maximum leverage is automatically the right choice.
What Happens if the Share Price Falls
Because the loan is secured against an asset whose value moves daily, lenders set a minimum collateral coverage level throughout the loan term. If your pledged stock falls in value and breaches this threshold, you’ll typically receive a margin call – a request to pledge additional securities, deposit cash, or repay part of the loan to restore the required coverage. On a recourse facility, failing to meet a margin call can expose you beyond the pledged stock itself; on a non-recourse facility, your maximum exposure remains limited to the collateral throughout. This is exactly why many borrowers deliberately choose a lower loan-to-value than the maximum on offer, building in a buffer against normal market volatility regardless of which structure they choose.
What Stock Loan Proceeds Can Be Used For
Because stock loans are generally unregulated, proceeds can typically be used for a broad range of purposes, including a UK property deposit or purchase, business capital, or covering a tax liability without an untimely forced sale of your holdings.
Realistic Timescales
Most stock loan facilities complete within one to three weeks once the portfolio and legal work are confirmed, considerably faster than most conventional lending routes given the largely unregulated nature of this kind of borrowing – worth knowing if your need for capital is genuinely time-sensitive.
Related Securities Lending Products
If your holding is in a company still ahead of a public listing, our Pre-IPO Loans page covers financing against this specific category of shares. If your digital assets sit alongside your listed portfolio, our Crypto-Backed Loans page covers borrowing against Bitcoin, Ethereum, and other major cryptocurrencies specifically. If you’re weighing stock loans against raising funds through UK property instead, our Expat Secured Loans page covers that property-secured alternative in detail.
Stock Loans Compared With Other Funding Routes
| Stock Loan | Second Charge on Property | Conventional Mortgage | |
| Collateral | Listed shares | UK property equity | Property being purchased |
| Typical LTV | 50-70%, varies by holding | Up to 95% combined with first charge | Up to 75-85% |
| Regulatory status | Generally unregulated | Can be regulated or unregulated | FCA regulated (residential) |
If raising funds against UK property rather than a share portfolio suits your circumstances better, our Expat Secured Loans page covers that property-secured alternative in detail.
Tax Considerations Worth Understanding
Borrowing against shares is not, in itself, a disposal for capital gains tax purposes, meaning no CGT liability arises simply from taking out a stock loan. If pledged stock is later sold, whether through a margin call or at loan maturity, a disposal does occur at that point and any gain becomes taxable as normal. It’s worth discussing your specific tax position with a qualified adviser; we are lending specialists, not tax advisers.
Combining a Stock Loan With Property Finance
Many clients use a stock loan alongside a conventional mortgage – for example, funding a deposit through a stock loan while arranging standard finance for the remainder of a purchase. Our High Value Mortgages and Private Bank Mortgages pages cover this kind of combined structure.
A Broader Portfolio Alternative
If your wealth is spread across equities, bonds, and other assets rather than shares alone, our Lombard Loans page covers a broader structure that lets you pledge the full portfolio together.
Frequently Asked Questions
What loan-to-value can I expect against my share portfolio?
Commonly in the region of 50-70% for listed, liquid holdings, with private or unlisted shares typically capped considerably lower at 15-45% given the greater illiquidity involved.
What’s the genuine difference between a recourse and non-recourse stock loan?
With a recourse loan, the lender can pursue your other assets if the pledged stock doesn’t cover a shortfall; with a non-recourse loan, the lender’s claim is limited entirely to the pledged shares, and you can walk away without further personal liability.
Why would I choose a recourse loan if non-recourse limits my risk?
Non-recourse facilities are typically priced somewhat higher and can carry a more conservative loan-to-value, reflecting the additional risk the lender is taking on – the right choice depends on how much you value limited personal exposure against marginally better terms.
Is a single stock loan riskier than a diversified stock loan?
Generally viewed as somewhat higher risk by lenders, since the facility depends on one company’s share price rather than a spread of holdings – often resulting in a more conservative loan-to-value.
What happens if my pledged stock falls sharply in value?
You’ll typically face a margin call requiring additional collateral, a cash top-up, or partial repayment to restore the required coverage – on a non-recourse facility, your maximum exposure remains limited to the collateral throughout.
Is a stock loan a disposal for capital gains tax purposes?
No – borrowing against shares doesn’t itself trigger CGT, though a later sale of the pledged stock does create a taxable disposal.
How long does a stock loan typically take to complete?
Commonly one to three weeks once the portfolio and legal work are confirmed, considerably faster than most conventional lending routes.
Can I use stock loan proceeds toward a UK property purchase?
Yes, this is a common use – many clients fund a deposit or full purchase this way rather than liquidating a portfolio position.
Get in touch with details of your portfolio and funding requirements, and we’ll help you understand whether a stock loan is the right route for your circumstances, including which recourse structure genuinely suits your risk appetite.
