Paying with debt: leveraging your investments
Borrowing against your investments and assets can help you fund new opportunities while preserving liquidity.
Key takeaways
Investors can use their assets, such as stocks, real estate or even art as collateral to borrow and purchase additional assets.
Securities-based lending, real estate-backed borrowing and specialty-asset financing offer flexibility but come with unique risks and requirements.
Strategically borrowing against your assets can help manage your cash flows, offer tax efficiency and maintain your long-term investment strategy, especially when coordinated with an advisory team.
Borrowing Against Your Assets
When a timely opportunity arises, whether it’s purchasing a home, acquiring a collectible, or investing in a new venture, many investors prefer not to sell existing holdings. Instead, they may consider using assets they already own as collateral to borrow funds. This approach can allow you to keep your investments intact while accessing liquidity for other purposes.
Borrowing against assets is not suitable for everyone and carries meaningful risks. It works best when carefully aligned with your overall financial plan, time horizon, and risk tolerance.
Public market investments (stocks, bonds, mutual funds)
Securities-based lines of credit (often called SBLOCs in the US) allow you to borrow against the value of a diversified, liquid investment portfolio held in non-retirement accounts. These loans are typically “non-purpose,” meaning the proceeds generally cannot be used to purchase additional securities but they can fund real estate, lifestyle expenses or other needs.
Loan-to-value (LTV) ratios usually range from 50% to 70%, depending on the liquidity and volatility of the assets. Because the collateral is marketable securities, these loans can often be arranged relatively quickly. However, if the portfolio value declines significantly, lenders may issue a margin call, requiring you to add collateral or repay part of the loan on short notice.
In Europe, similar securities-backed lending solutions exist through private banks and wealth platforms, though structures, regulatory oversight (e.g., under MiFID II) and maximum LTV ratios can vary by country. Interest rates are often variable and tied to benchmark rates such as SOFR (US) or EURIBOR (Europe).
Real estate
Primary residences, second homes, investment properties or commercial real estate can serve as collateral for larger, longer-term loans. Common structures include:
Home equity lines of credit (HELOCs) , more common in the US
Cash-out refinancing
Asset-backed or mortgage-style loans
In Europe, equivalent products include mortgage equity release, further advance loans or Lombard-style lending against property. Real estate loans often allow higher LTV ratios than securities-based loans, especially if the property generates rental income. However, processing times are longer and real estate is less liquid than securities. Loan terms can also be sensitive to changes in interest rates and local property market conditions.
Specialty assets: Art, aircraft, boats, collectibles
Loans against fine art, luxury yachts, classic cars, or other collectibles are highly customized and typically offered by specialized lenders. These arrangements often come with lower LTV ratios (sometimes 40–60%), higher interest rates, shorter terms, and stricter requirements around authentication, valuation, storage, and insurance.
Because specialty assets can be harder to value and sell quickly, they are frequently used as supplementary collateral to increase overall borrowing capacity rather than as the primary source of funding. Availability and terms differ significantly between the US and Europe, with major art-financing hubs in cities like New York, London, Geneva, and Hong Kong.
Borrowing Instead of Using Cash
Even with plenty of money in the bank, borrowing can sometimes be the more practical choice.
Preserve Liquidity and Investment Strategy : Borrowing lets you keep assets invested and potentially continue benefiting from long-term growth without triggering a sale.
Potential Tax Considerations : Selling appreciated assets can create immediate capital gains taxes in both the US and Europe. Borrowing may allow you to defer such taxes. In some cases, interest on loans used for investment purposes may be tax-deductible (rules vary by jurisdiction and require confirmation with a tax advisor).
Maintain Flexibility: You can respond to opportunities while keeping your existing portfolio and cash reserves intact.
However, these benefits are not guaranteed and must be weighed against borrowing costs, potential risks and your overall financial picture. Borrowing is not always more advantageous than paying cash outright.
Potential risks when borrowing against your assets
Borrowing against your assets can offer flexibility, but it's not risk-free.
Here's what to keep in mind:
Asset values can drop. If your collateral loses value, you may need to quickly add more funds or pay part of the loan back to stay in good standing. This can create a compounding strain on your available cash or potentially force untimely sales.
Interest costs can rise. Loans tied to investments often come with variable interest rates, so your payments might increase over time. However, costs could move in your favor in a falling interest rate environment.
Access to money isn't always immediate. Real estate and luxury assets might take longer to appraise and process. They also may be more difficult to sell quickly in a downturn.
Loan restrictions apply. Some types of borrowing limit what you can use the money for. For example, SBLOCs can't be used to buy more investments.
Make sure any borrowing plan also includes an exit strategy in a worst-case scenario. Leverage can multiply the pain of a downturn without proper planning.
How this fits into your bigger financial picture
Borrowing against your assets can help you move money where you need it without changing your overall strategy. It often comes into play with:
Tax and estate planning: Shifting assets while managing taxes
Cash flow planning: Accessing funds for short-term use without selling investments
Diversification: Funding new opportunities while keeping your portfolio intact
Philanthropy: Supporting giving strategies without pulling cash from your portfolio
Even for experienced investors, these decisions benefit from a stress test. Careful coordination with advisors, tax professionals and estate planners can help. The right borrowing strategy depends not only on what an investor owns but also on what they need and want to accomplish and what level of risk they are open to.
The bottom line
For high-net-worth investors, borrowing isn't always about needing more. It's about using what you already have in a more strategic way. But like any financial decision, the benefits must be weighed against risks, associated costs and broader goals. Used thoughtfully and with a plan, borrowing against your wealth can help preserve it.