Lombard Loans Explained: How HNW Buyers Use Securities-Backed Lending to Buy Property Abroad Without Selling
Published on: June 4, 2026
Quick answer: A Lombard loan, also called securities-backed lending, lets a high-net-worth buyer borrow against a pledged portfolio of stocks, bonds, and funds instead of selling it, then use the cash to buy property abroad. The appeal over a mortgage is threefold: no sale means no capital-gains tax event, you stay invested and keep the upside, and because the collateral is liquid the facility is fast, light on paperwork, and often interest-only with no fixed repayment schedule. The defining danger is the margin call: if the portfolio's value falls, the lender can demand more collateral or sell your securities at the worst possible time, so it suits buyers with a substantial, diversified, liquid portfolio who borrow conservatively and can absorb that risk, and is wrong for anyone whose wealth is concentrated, illiquid, or fully deployed.
When a high-net-worth buyer wants property abroad, the mortgage is often the last tool they reach for, not the first. The reason is simple. They already hold the wealth, but it sits in a portfolio of stocks, bonds, and funds. Selling that portfolio to free up cash triggers capital gains tax, forces them out of positions they want to keep, and times their exit to the property market rather than the financial one.
The classic move instead is a Lombard loan: borrow against the portfolio without selling it, and use the cash to buy the property. It is one of the cleanest financing structures in the cross-border playbook, and it is almost entirely absent from mainstream property guides, because most guides are written for the mortgage market, and this is a different product entirely.
What is a Lombard loan?
A Lombard loan, also called securities-backed lending (SBL) or a portfolio-backed credit line, is a loan secured by pledging a portfolio of marketable financial assets. The assets stay invested and in your name; you simply grant the lender (typically a private bank or wealth manager) a charge over them as collateral. In return, you get a credit line you can draw on, including to buy property.
The mechanics:
- You pledge eligible securities, usually a diversified portfolio of liquid stocks, bonds, and funds.
- The lender assigns each asset class a lending value (an advance rate, or "haircut"): conservative for cash and high-grade bonds, more aggressive haircuts for volatile equities.
- The sum of those lending values is your borrowing capacity.
- You draw down, buy the property, and pay interest, typically on a floating rate tied to a benchmark.
Because the collateral is liquid and easily valued, Lombard lending is fast, light on paperwork, and flexible. There is no property valuation bottleneck, no income-documentation marathon, and often no fixed repayment schedule, you service interest and repay principal when it suits your plan.
Why HNW buyers prefer it to a mortgage
A foreign mortgage and a Lombard loan can both buy the same villa. They feel completely different to the borrower:
| Foreign mortgage | Lombard loan | |
|---|---|---|
| Secured against | The property itself | Your investment portfolio |
| Speed | Weeks to months | Days |
| Underwriting | Heavy income + property checks | Light; based on collateral |
| Repayment | Fixed schedule over years | Flexible, often interest-only |
| Tax | , | No sale, so no capital gains event |
| Main risk | Default → lose the property | Portfolio falls → margin call |
The three advantages that drive the decision:
- No tax event. Selling appreciated stock to fund a purchase realises capital gains. Borrowing against it does not. For a buyer sitting on years of unrealised gains, this alone can justify the structure.
- Stay invested. You keep your market exposure and any future upside, dividends, and income. You are not forced to liquidate a portfolio you built deliberately.
- Speed and discretion. With collateral already held at the bank, drawing a Lombard facility can be near-instant, invaluable for a competitive purchase or a short closing window abroad.
What it costs
Lombard pricing is usually a floating rate: a reference benchmark plus a margin set by your relationship with the lender, the size of the facility, and the quality of the pledged portfolio. Larger, higher-quality, more diversified portfolios get finer pricing.
The cost calculus that matters is the spread between your borrowing cost and your portfolio's expected return. If your portfolio is reasonably expected to return more than the loan costs, you are, in effect, financing the property cheaply while keeping your capital working. If borrowing costs rise above your portfolio return, the arbitrage inverts and the structure becomes expensive. Because the rate floats, this relationship can shift during the life of the loan, model it, don't assume it.
The risk that defines Lombard lending: the margin call
Every advantage of a Lombard loan flows from the collateral being liquid and market-priced. So does its central danger.
If the value of your pledged portfolio falls, your loan-to-value ratio rises. Cross a threshold and the lender issues a margin call: you must post additional collateral or repay part of the loan, fast. If you cannot, the lender sells your securities, at the worst possible time, in a falling market, locking in losses and, ironically, triggering the very tax event you borrowed to avoid.
This is the trap. A Lombard loan is comfortable in calm markets and brutal in a crash, precisely when you are least able to top up collateral. The defences are the same ones disciplined borrowers use everywhere: borrow conservatively relative to your portfolio value, keep a buffer of liquid reserves, and prefer a diversified, lower-volatility collateral pool over a concentrated, volatile one. A portfolio that is one stock is a margin call waiting for a bad earnings day.
Currency and cross-border wrinkles
Buying property abroad adds a layer:
- Currency mismatch. If your portfolio is denominated in one currency and the property purchase in another, exchange-rate moves affect both your collateral value and your liability. A double adverse move, falling portfolio and unfavourable currency shift, compounds the margin-call risk.
- Jurisdiction of the lender. Lombard facilities are usually arranged through a private bank where your assets are custodied; the lending relationship and the property purchase may sit in entirely different legal systems. Coordinate your banker, your tax adviser, and your local property lawyer.
- Eligible collateral varies. Lenders accept different securities and apply different haircuts. Concentrated positions, illiquid holdings, and certain fund structures may be discounted heavily or excluded.
Who securities-backed lending suits
Lombard lending is for buyers with a substantial, liquid, diversified investment portfolio who want property exposure without disturbing it, and who understand and can absorb margin-call risk. It rewards discipline and punishes leverage stacked on volatility.
It is not for buyers whose wealth is illiquid, concentrated, or fully deployed, nor for anyone who would be unable to meet a margin call in a sharp market drawdown.
Lombard vs. the other "don't sell, borrow instead" tools
The same instinct, unlock liquidity without selling the asset, drives several structures we cover:
- Lombard / SBL borrows against a securities portfolio.
- Crypto-backed lending borrows against a Bitcoin or crypto holding (same logic, far higher volatility, sharper liquidation).
- Equity release borrows against property you already own.
- Bridging finance borrows short-term against property to solve a timing gap.
They share a philosophy and differ entirely in collateral, cost, and risk profile. Lombard is the institutional, lowest-volatility member of the family.
Frequently asked questions
Can I really buy a house without selling my stocks?
Yes, that is precisely what securities-backed lending is for. You pledge the portfolio as collateral, draw a loan, and buy the property, while the portfolio stays invested in your name.
Is a Lombard loan cheaper than a mortgage?
It can be, especially for HNW borrowers with quality portfolios, and it avoids a capital-gains tax event. But it floats with rates and carries margin-call risk a mortgage does not. "Cheaper" depends on rates, your portfolio's return, and how the market behaves during the loan.
What is a margin call?
A demand from the lender to post more collateral or repay part of the loan because your pledged portfolio has fallen in value and your loan-to-value has risen above the agreed limit. If you can't meet it, the lender sells your securities.
Do I keep my dividends and gains while the loan is outstanding?
Generally yes, the assets remain yours and continue to earn, since you have pledged rather than sold them. That retained upside is a core reason the structure is used.
Who offers Lombard loans?
Typically private banks and wealth managers, usually to existing clients whose assets they already custody. Access is closely tied to having a meaningful portfolio with the institution.
Borrow against the portfolio, buy in the right market
A Lombard facility keeps your capital working, make sure the property earns its place too. Compare yields, taxes, and ownership rules across 50+ countries on JanusHermes before you draw down.
This article is general information for international property buyers, not financial, tax, or investment advice. Securities-backed lending carries margin-call risk that can force the sale of your assets at a loss; rules, eligible collateral, and tax treatment vary by jurisdiction. Consult your private banker, an independent tax adviser, and a locally licensed property lawyer before pledging any portfolio.
