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27 Jul 2021

Q&A: Could a Portfolio Loan be right for you?

A portfolio loan could help you unlock the value of your wealth. Here, Private Banker Samy Latif answers some commonly asked questions.

Case Study: Entrepreneurial client raises capital for commercial property

In a competitive property market, time is of the essence when it comes to securing prime real estate. When one of our entrepreneurial clients found the right commercial property to support the expansion plans of their business, they knew they needed to react quickly.

With £1.5 million required to purchase the property, our client needed to access capital swiftly, but knew that liquidating his portfolio could potentially trigger an immediate capital gains tax liability. While he could have arranged a mortgage over the property, this would have resulted in additional set-up costs and a slightly lengthier process. 

Instead, Investec provided a loan secured against the investment portfolio of the co-founder of the business. The portfolio was held by Investec Wealth & Investment. This gave the client swift access to the funds needed to complete the purchase of the property – and a clear competitive advantage. 

Here, Private Banker Samy Latif answers some of the commonly asked questions about portfolio loans and explains how this approach to lending could help you achieve your financial goals. 

What is a Portfolio Loan?

A portfolio loan is an on-demand facility which enables clients to borrow funds in a fast and flexible way. The loan is secured against the value of a discretionary portfolio managed by Investec Wealth & Investment (IW&I) which may include general investment accounts, ISAs and offshore bonds.  

Our portfolio loan offering allows clients to borrow for any legal purpose. The minimum loan is £500,000 (£100,000 where the loan proceeds are used to re-invest back into the IW&I portfolio). Funds can be drawn in Sterling, Dollars or Euros and you can choose to repay the loan at any time without penalty. 

When can a Portfolio Loan be used?

Individuals might borrow against their portfolio for many different reasons including:

  • The purchase of property (including owner-occupied, investment and commercial properties)
  • To gift or loan monies to children 
  • To invest into a business 
  • To purchase a luxury item 
  • To refinance existing borrowing
  • To re-invest back into the investment portfolio

As always, requests are considered on a case-by-case basis.

Samy Latif
Samy Latif, Private Banker, Investec

It’s usually possible to transfer your portfolio to Investec Wealth & Investec (IWI) or refinance an existing loan and our teams work closely together to ensure the smooth transfer of your assets.

What are the potential advantages of using a Portfolio Loan instead of liquidating investments?

A portfolio loan could allow you the freedom to access funds without triggering an immediate tax liability from the sell down of the portfolio.  

Should you have a funding need, by borrowing instead of withdrawing from the portfolio, your portfolio remains intact, thereby potentially benefiting from upward market movement and continued yield. With interest rates at historic lows, many clients are viewing this as a good time to borrow.  

Portfolio loans can be easy to arrange and there are no early repayment charges. An arrangement fee and legal fees may apply.  

What kind of investment portfolio is eligible?

 In the majority of cases, Investec lends against discretionary portfolios. In some circumstances, advisory portfolios are also accepted. 

We are able to lend against General Investment Accounts, ISA’s and Offshore Bonds where the investment is managed by IW&I. Security can be in individual names or in the name of a special purpose vehicle.  

We don’t lend against pensions (such as Self-Invested Personal Pensions) or single stock investments.  

In order to take out a portfolio loan, your investment portfolio must be under the management of Investec Wealth & Investment. Other credit and lending criteria also apply. 

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Samy Latif, Private Banker, Investec

Portfolio loans can be relatively easy to arrange with relatively low set-up fees.

Can I transfer my portfolio or existing portfolio loan to Investec Wealth & Investment?

We have assisted a number of clients who have wished to move their portfolio to IW&I and where there is an existing loan secured against the portfolio held by the incumbent institution. Our teams will work closely with your existing provider to ensure the process is as smooth as possible. 

Depending on your circumstances, costs associated with transferring your portfolio to IW&I may apply. 

Are there any other considerations to bear in mind?

It’s important to remember that the portfolio loan is an on-demand facility and Investec can legally demand repayment of the loan at any time, for example where the agreed loan to value maximum is exceeded.  

We would be delighted to explain our Portfolio Lending offering in more detail.  

Once we’ve received all of the relevant information from you, you should be able to receive a decision on your application in a matter of days. If you’d like to know more, please get in touch with me or my team.  


Interested? Start a conversation today.