Lending on a diversified portfolio is an option available via many banks. They favour the reduced risk and are delighted to take on the assets as security.
However, what options do you have if you hold a single line of stock and need liquidity? Perhaps you have been awarded stock as part of your employment and wish to maintain your position while raising funds for another investment or property purchase. Or maybe you have a particularly large investment in one stock and your bank cannot fund as much as you require.
For example if you were a FTSE 100 CEO, and you went to a traditional private bank for a loan against the pretty liquid stock, then usually you are looking at around 40 – 45% Loan to Value and a 10% drop in share price to trigger a margin call.
A single line stock specialist lender can offer Loan to Values of 60 – 70% and allow for a much deeper margin call, along the lines of a 50%, which is very attractive when stocks are less liquid and more volatile.
Benefits of a single stock loan
This lending is a non recourse loan meaning you can walk away from the loan if the share price falls significantly and you feel that the value may not recover.
From initial conversation to drawdown generally takes a couple of weeks. This is much faster than a traditional mortgage for example where valuations and conveyancing will need to take place. The lender will need to complete a KYC process which can take circa 24 hours.
Securities loans are for high net worth individuals or professional investors as per the FCA definitions. They are not affordability tested and so the borrower needs to decide if they can afford to borrow the funds. This can be favourable for asset rich income poor individuals who cannot demonstrate income via a tax return or payslip but hold other investments.
More on How To Create Liquidity From Investments
- How Much Does Lending On A Single Line Stock Cost? In the last decade, it’s always been the case that a single line stock has cost more than a typical mortgage or portfolio loan. Read More…
- What Can I Use A Single Stock Securities Loan For? Any legal purpose. Where mortgages require the funds to be used for an approved purpose. Read More…
- Are you eligible for a single line stock loan? The shares will need to be in a publicly listed exchange. Read More…
The Guide to Securities Backed Lending
Securities-backed lending provides ready access to capital. From Property Development Finance and Bridging Finance to standard mortgages, you can use securities-backed lending (also known as Lombard loans) for various purposes.
Securities-backed lending can be an exceptionally useful tool for creating liquidity quickly. As well as more “traditional” Lombard loans against a diverse portfolio of liquid, listed securities, Advias can also broker more unusual deals.
These loans are typically used to access liquidity quickly, allowing investors to take advantage of time-sensitive opportunities or diversify their positions.
Advias has a proven track record of acting in clients’ best interests and negotiating the best outcome.