Investment backed lending

A fast, flexible option to access funds

 

life's full of surprises

If you suddenly need extra funds, whether it’s to buy something special or support your day-to-day needs, Investment Backed Lending (IBL) could be for you.

It’s an option worth considering if you have money invested for the long term and don’t want to sell out of the markets in the short-term. It can provide fast access to funds through an overdraft using your investments as security.

You still keep the stocks, bonds and other assets you own in your investment portfolio, and continue to receive the potential returns they might generate. But they act as collateral against the overdraft.

Like any form of borrowing, it’s important to be aware of the risks versus the returns, and of what else is available. Investment Backed Lending is just one option, after all, and our private bankers and wealth managers are on hand to help you explore all possibilities.

 

See our investment backed lending brochure and read about our other lending products.

 

The benefits

  • You only pay interest on the amount of the agreed overdraft you use
  • There are no costs involved in setting it up
  • It is available in a number of currencies
  • We require no external valuation of your investments if you invest with Coutts

 

 

 

 

 

The caveats

  • This product is not suitable if:
    • you are using it to buy your primary personal residence, a second or holiday home for personal use, or related expenses, such as renovation or improvement on such properties, or related lease or service charges
    • you rely on the income and capital from your investments and cash to maintain your standard of living
  • You need to have over £1 million in investments to be considered for Investment Backed Lending at Coutts

 

 

an example

Buying a classic car

 

Investment Backed Lending can be a flexible and efficient way to fund a short-term gap between selling one thing and buying another.

One of our clients with a passion for classic cars was looking to sell one vehicle so he could buy a model he’d wanted for years.

The nature of the car market means it can take time to sell, but opportunities to buy can come up at short notice. Our client needed money quickly to cover the cost if he was to fulfil his ambition.

He had enough invested with Coutts for the purchase, so could have sold his investments, but he didn’t want to do that only to reinvest after selling his other car. As well as time out of the market and administrative costs, there were potential tax implications from realising gains when his allowances for the current year had already been used.

This made Investment Backed Lending a good option for this particular client. It gave him a quick, low-cost facility he could draw on right away. He bought the car he really wanted while keeping his investments intact.

 

Find out more about investing with Coutts

IMPORTANT INFORMATION – INVESTMENT BACKED LENDING

 

This product may not be suitable for you if:

  • you are using it to purchase your primary personal residence, a second or holiday home for personal use, or related expenses, such as renovation/improvement on such properties or related lease/service charges.
  • you require any advice to you on the merits or suitability of the product for you.
  • you rely on the income and capital from your investments and cash to maintain your standard of living.

We strongly recommend you seek your own independent advice if you are unsure whether this product is suitable for you. We also recommend that you seek tax advice as this is not something we provide.

Before you borrow against investments, you should understand these risks:

  • If the security you provide is insufficient to support the amount you have borrowed, you may be required to rectify the shortfall at short notice – this is referred to as a margin call
  • If you borrow to purchase investments and these investments are themselves provided as security for your liabilities, your losses or gains could be magnified
  • If your borrowing is in a different currency to the limit, fluctuating exchange rates could result in the limit being exceeded and you may be required to rectify the shortfall at short notice – this is referred to as a margin call.
  • Lending secured over investments can have an adverse impact on the value of your investments. This risk is amplified if the funds are used for leverage purposes. Investment values can fall as well as rise, your capital is at risk.

The final decision whether to proceed must be your own and in making your decision you should carefully consider the comparison between borrowing costs and potential investment gains/losses.

 

LENDING AGAINST INVESTMENTS MUST NOT BE USED FOR RESIDENTIAL PROPERTY PURPOSES. SECURITY IS REQUIRED. OVER 18s ONLY.

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