What a portfolio-backed loan is
You pledge a custody account holding liquid securities to a lender. The lender assigns each holding an advance rate — the percentage of its market value it is willing to lend against — and the sum of those becomes your borrowing limit. You draw down as needed, pay floating interest on the drawn balance only, and repay on your own timetable within the facility term.
The critical difference from a mortgage is that there is no amortisation schedule and no property valuation. The collateral is marked to market daily, which makes the facility fast to arrange — days rather than months — but also means your borrowing capacity moves with the market.
Banks distinguish between an uncommitted facility, which they can withdraw or reprice at short notice, and a committed line, which is contractually available for a fixed term at a fixed margin. Committed lines cost more but are the right choice when the borrowing funds a hard commitment such as a residency investment with a legal deadline.
Selling €500,000 of long-held equities to fund a visa can trigger a capital gains bill larger than several years of loan interest. Model the tax cost of selling before you assume self-funding is cheaper.
Advance rates by asset class
Advance rate — often called loan-to-value or lending value — is where lenders differ most. The ranges below reflect what private banks and larger brokers were quoting in 2026 on diversified portfolios.
| Collateral | Typical advance rate | Notes |
|---|---|---|
| Government bonds (investment grade) | 80–95% | Highest advance rates; short duration scores best |
| Investment-grade corporate bonds | 70–85% | Rating and issuer concentration drive the number |
| Broad-market equity ETFs | 60–75% | Diversification is rewarded over stock picking |
| Large-cap listed equities | 50–70% | Per-line caps common above 10–20% of portfolio |
| Small caps / emerging markets | 20–50% | Some banks exclude entirely |
| Structured products & hedge funds | 0–50% | Case by case; liquidity terms decide |
| Single concentrated stock position | 0–40% | Often refused or heavily haircut |
What it costs in 2026
Pricing is a floating reference rate plus a negotiated margin. In euros the reference is €STR or one-month EURIBOR; in dollars SOFR; in sterling SONIA; in Swiss francs SARON. Margins on portfolio-backed facilities for private clients sat around 90–200 basis points in 2026, tightening above €1m and again above €5m.
Brokers publishing tiered margin rates can undercut private banks on headline cost, particularly on large balances, but they typically offer harsher, automated liquidation mechanics. Private banks charge more and negotiate more. Which is cheaper depends on the size and duration of the borrowing, not on the headline number alone.
Arrangement fees are usually zero to 0.50% of the limit. Undrawn commitment fees appear mainly on large committed lines.
Margin calls: the mechanics that actually matter
- The trigger is a fall in collateral value, not a fall in your net worth. A 25% market drawdown on a facility drawn to 50% of lending value can put you in breach even if you have other assets.
- Cure periods vary from same-day to five business days. Ask for the contractual period in writing — it is the single most important term in the agreement.
- You can usually cure by pledging more securities, wiring cash, or selling holdings. Lenders reserve the right to sell for you, at their choice of holdings and timing, if you do not act.
- Run the facility at 40–50% of available lending value rather than the maximum. The headroom is what stops a normal correction becoming a forced sale.
- Currency mismatch amplifies risk: EUR borrowing against USD collateral means an adverse FX move can trigger a call with no market drawdown at all.
Using a portfolio-backed loan for a residency investment
The structure fits residency and citizenship by investment well because these programmes require a lump sum at a fixed point in time, held for a defined period. Borrowing bridges that requirement without disturbing a portfolio built over decades.
Two constraints matter. First, several programmes require proof that the invested funds are yours and lawfully sourced; borrowed funds are acceptable in most jurisdictions but the loan documentation becomes part of the source-of-funds file. Second, a handful of citizenship by investment programmes restrict financing of the qualifying contribution outright.
Portugal's fund route is the most financing-friendly of the major European programmes. Greece's property route is more commonly financed with a cross-border mortgage, sometimes alongside a portfolio facility for the deposit.
Interest on a loan used to acquire an income-producing investment may be deductible in some jurisdictions and not in others. This is a tax-residency question, not a lending question — settle it before you draw.
When not to use one
- Your portfolio is one or two concentrated positions — advance rates collapse and margin call risk is extreme.
- The portfolio is under roughly €250,000 — most private banks decline, and broker terms are less forgiving.
- You would need to draw close to the maximum lending value to fund the commitment.
- You have no liquid reserve outside the pledged account to cure a call.
- The holding period of the residency investment is longer than the committed term of the facility.
Frequently asked questions
What is a portfolio-backed loan?+
A credit facility secured against a pledged portfolio of liquid securities. You borrow a percentage of the portfolio's value, pay floating interest on the drawn balance, and keep the portfolio invested rather than selling it.
How much can I borrow against my portfolio?+
Between roughly 20% and 95% of market value depending on the assets. A diversified portfolio of investment-grade bonds and broad ETFs typically supports 60–80%; concentrated single-stock holdings support far less or nothing.
What interest rate will I pay?+
A floating reference rate — €STR, SOFR, SONIA or SARON — plus a margin of roughly 90 to 200 basis points in 2026. Larger facilities and higher-quality collateral price at the tighter end.
Is a portfolio-backed loan the same as a Lombard loan?+
Effectively yes. Lombard loan is the private-banking term, portfolio-backed or securities-backed lending is the broader market term, and margin loan usually refers to the brokerage version with automated liquidation.
Do I still receive dividends and interest on pledged assets?+
Yes. Pledging does not transfer ownership. You keep dividends, coupons and market exposure, and can normally trade within the account subject to the lender's eligibility rules.
Can I use a portfolio-backed loan to fund a golden visa?+
In most residency by investment programmes, yes — the borrowing simply forms part of your source-of-funds documentation. Some citizenship by investment programmes restrict financing of the qualifying contribution, so check the specific programme first.
Discuss your financing with a CISI Level 7 adviser
We model the loan against your actual portfolio, the programme you are targeting, and your tax residency — before you commit capital. No product commission, no obligation.