The finance industry is awash with terminology which isn’t always clear or straightforward, and Lombard Lending is one term we often find can meet with a blank face. However, we’re increasingly finding it to be a successful financing solution for a range of clients.
Our CEO and Founder Paul Welch explains more:
What’s the definition of Lombard Lending?
Lombard Lending is also known as margin lending. Although it shares the same name, it’s not related to the personal finance company Lombard and, in fact, comes from the Italian region of Lombardy where this type of lending is said to have originated.
How does Lombard Lending work?
Lombard Lending means placing custody and asset shares – which can include stocks, shares and insurance policies – with a bank that can lend against those assets. That means you can leverage investment assets without the need to liquidate them in order to realise their value.
What’s the benefit of Lombard Lending?
Lombard Lending is helpful for clients who want to retain liquidity in their portfolio or diversify to look for higher returns. It allows them to do so whilst retaining their assets or investments – either because they’re keen to hang on to the security or they’re simply not in a position to sell.
What’s the profile of clients who structure their lending this way?
The clients we work with are incredibly diverse but commonly this type of lending is particularly helpful if you’re cash rich, but have limited or no income – for instance if you’re retired or taking time out. Many lenders won’t accept an applicant without a proven income stream, even if they have large sums of money in the bank. However, leveraging your assets can provide lenders with the requirement they need for security on a large loan, and it can often lead to opportunities to secure a high LTV.
Where can I find out more?
Don’t hesitate to get in touch with our team if you’re intrigued and would like to find out more. Our expert advisers are always on hand to offer help and guidance to take you through the best possible option, tailored to your individual circumstances.
The Financial Conduct Authority does not regulate some aspects of Lombard lending. Your home or property may be repossessed if you do not keep up repayments on your mortgage.