A Lombard loan: fund your project without selling your investments. Keep a safety margin

What is a Lombard loan? A simple definition

A Lombard loan means borrowing by pledging your investments as collateral, instead of selling them. Lombard lending, Lombard credit and securities-based lending describe the same mechanism, known in France as crédit lombard and in Spain as préstamo lombardo.

It brings together five elements:

• the pledged assets: securities accounts, life insurance or capitalisation policies, sometimes cash;
• the lending value: the market value of each asset multiplied by a loan-to-value ratio set by the bank;
• the form of the loan: a fixed-term advance or a credit line you draw on as needed;
• the interest rate: variable or fixed, depending on the bank;
• monitoring of the cover: the bank regularly recalculates the value of your collateral.

How does a Lombard loan work?

The bank adds up the lending value of each pledged asset; you can borrow up to that total, and the bank then checks that the collateral remains sufficient. The steps:

1. You identify the assets to pledge.
2. The bank assigns each one a loan-to-value ratio based on its liquidity, volatility, currency and concentration.
3. You sign the pledge agreement. For a life insurance policy governed by French law, this is done by endorsement or by deed, and if a beneficiary has already accepted the policy, their consent is required (article L. 132-10 of the French Insurance Code (code des assurances)).
4. The funds are paid out in one go or made available to draw.
5. The cover is monitored for the whole life of the loan.

These ranges are market orders of magnitude, not a rate card: each bank publishes or provides its own grid, and may give an asset a loan-to-value of zero.

Run your own simulation in three lines:

• Borrowing capacity = sum of (value of each asset × its loan-to-value).
• Safety margin = capacity − amount borrowed.
• Utilisation rate = amount borrowed ÷ capacity. Above 60%, I consider you exposed.

What is the minimum amount for a Lombard loan?

There is no legal minimum; each bank sets its own, and private banks typically start at around €100,000 of credit. The pledgeable financial assets required usually run to several hundred thousand euros, because the bank only lends a fraction of their value.

The minimum is not the only filter. The bank also looks at your profile (income, source of funds, tax residence), the quality of the assets, what the money will be used for and, often, the overall relationship you will have with it.

What are Lombard loan interest rates?

A Lombard loan rate is usually variable: a benchmark index, generally Euribor, plus a margin specific to each bank. Some banks also offer a fixed rate on short-term advances.

For reference: 3-month Euribor was around 2.6% in September 2026 (monthly average published on the ECB data portal). This figure moves every day and is not the rate on your loan.

The bank's margin depends on the amount, the quality of the pledged assets, the term and the overall relationship. I do not publish a margin range: it varies too much from one bank and one case to another to be useful. Also factor in arrangement fees, a possible commitment fee on the undrawn part of a credit line, and currency risk if you borrow in a currency other than that of your assets or your income.

Interest-only or amortising: which repayment should you choose?

Most Lombard loans are interest-only (bullet repayment): you pay interest during the loan and repay the capital at maturity, often with the option to roll it over. Some banks still offer amortising repayment.

On €400,000 at a hypothetical rate of 4% a year (calculation assumption, not an offer):

• interest-only: €16,000 of interest a year, or about €1,333 a month, with the capital due at the end;
• amortising over 15 years: about €2,959 a month, for total interest of about €132,600.

Interest-only protects your cash flow but requires a clear repayment plan: selling the property, a partial withdrawal from the policy, the sale of another asset.

Lombard loan example: what can you borrow against an €800,000 policy?

Illustrative example. Assumptions: an €800,000 life insurance policy pledged, loan-to-value ratios set for the purpose of the example, €400,000 borrowed interest-only to buy a property. None of these figures corresponds to an actual offer.

The bank could lend up to €500,000. You borrow €400,000: you are using 80% of the capacity, with a €100,000 margin.

In the sharp-fall scenario, the policy has lost 23.5% of its value, yet the margin on €400,000 borrowed has gone. With €300,000 borrowed, the same shock passes without a margin call.

And what if you withdrew €400,000 instead? For a French tax resident: if gains make up 25% of the policy value (€200,000 of gains on €600,000 of premiums paid), a €400,000 withdrawal brings out €100,000 of taxable gains: €17,200 of social charges, plus income tax. If the policy is under 8 years old: 12.8%, so €30,000 in total. After 8 years: an allowance of €4,600 (€9,200 for a couple), then 7.5% on the share of gains relating to €150,000 of premiums per person and 12.8% above that, so about €26,400 (couple) to €28,100 (single person). In total, roughly between €26,000 and €30,000. The loan avoids this tax today, but at €16,000 of interest a year it becomes more expensive than a withdrawal after about two years. A Lombard loan is therefore justified by a time horizon and an expected return, never by tax alone.

What is a margin call? The real risk of a Lombard loan

When the lending value of your collateral falls below the amount borrowed, or below a warning threshold set in the contract, the bank makes a margin call. You then have to repay part of the loan, provide other assets, or accept that the bank enforces the collateral, meaning it sells the pledged assets or has them surrendered. On a life insurance policy governed by French law, the pledgee can trigger a surrender of the policy, unless the contract says otherwise (article L. 132-10 of the French Insurance Code).

What makes this risk serious:

• the response deadlines are set by the contract and can be very short;
• the sale often happens at the worst moment, turning a temporary fall into a permanent loss;
• a single concentrated position, or an asset that becomes ineligible, can make the lending value drop sharply.

My own safety rules: use only part of the capacity, diversify the collateral, keep cash outside the pledge, avoid a currency mismatch.

Can you use a Lombard loan to buy property? In France and abroad

Yes, a Lombard loan can finance property: a main or second home, a buy-to-let, or a cash purchase before selling another property, in France or abroad. It is often what lets you buy quickly, without a long financing condition in the purchase contract, or finance a property abroad that a French bank would not fund with a mortgage. The bank may nonetheless ask for a mortgage as additional security.

Does a Lombard loan escape France's 35% HCSF rule?

No, not automatically: that is a common misconception. The decision of the HCSF (France's High Council for Financial Stability) applies to the loans covered by article L. 313-1 of the French Consumer Code (code de la consommation), that is, in particular, loans intended to finance the purchase of a home, granted to borrowers located in France or intended to finance assets located in France (article 3 of decision D-HCSF-2021-7). The only exclusions provided for are bridging loans, renegotiations, refinancing with another lender and debt consolidation. The type of security, a pledge rather than a mortgage, plays no part in this test.

What this means:

• a Lombard loan used by a borrower located in France to buy a home falls, in principle, within scope: a debt-to-income ratio of 35% maximum and a term of 25 years maximum;
• the bank may depart from these criteria for up to 20% of its quarterly lending, of which at least 70% is reserved for buying a main residence (decision D-HCSF-2023-2 of 29 June 2023): the free portion, usable for a buy-to-let or a second home, is therefore limited to 6% of lending;
• a Spanish resident buying in Spain, or a loan with no residential property purpose, falls outside this framework.

The debt-to-income ratio is calculated on the maximum annual payments of all your loans over their term (article 4 of the decision). How an interest-only repayment backed by financial assets is treated in this calculation is a point to have the lending bank confirm in writing before you launch the project.

Lombard loan vs mortgage: what are the differences?

A traditional French mortgage relies on your income and on the property; a Lombard loan relies first and foremost on your financial assets.

Borrowing instead of withdrawing: what changes for tax?

For a French tax resident, as long as you do not withdraw, your gains are not taxed: a life insurance policy is taxed when you make a withdrawal. A Lombard loan therefore defers the tax; it does not eliminate it.

The interest:

• unfurnished buy-to-let: interest is deductible from rental income (revenus fonciers) if the borrowed funds were actually used to acquire or improve the let property, which you must be able to prove; the tax authorities also accept the deduction for an interest-only loan (BOFiP, BOI-RFPI-BASE-20-80, § 20, 270 and 290);
• furnished letting taxed on actual expenses (régime réel): interest is deductible if it meets the general conditions for deducting expenses from business income (BIC), meaning the loan was taken out in the interest of the letting activity and the expense is justified (impots.gouv.fr, "Location meublée : les régimes d'imposition");
• main or second home, investments: no deduction.

Can you get a Lombard loan against Luxembourg life insurance?

Yes, it is one of the most common structures: the Luxembourg policy is pledged to the bank, often its depositary bank, and your assets keep working. Three points to check before opening the policy, not after:

• does the bank accept each investment as collateral, and at what loan-to-value? A dedicated fund loaded with illiquid assets may be worth almost nothing as collateral;
• does the loan currency match that of the policy and of the project?
• is the structure compatible with your current and future country of residence?

Everything else about the policy is covered on my Luxembourg life insurance page.

Which banks offer Lombard loans, and who can get one?

Lombard loans are mainly offered by private banks: those of the major French banking groups, Luxembourg and Swiss banks, and the depositary banks of Luxembourg policies. The right lender depends first of all on where your assets are held.

They are open to individuals, resident or non-resident, and to family holding companies, provided you hold assets the bank accepts and pass its checks (identity, source of funds, tax residence). Business owners after selling their company and people with invested private wealth are the most frequent profiles.

My role: looking at the transaction within your wealth as a whole (pledged policy, horizon, downside scenario), then introducing you, through Uptimi, to an authorised lender or intermediary suited to your situation. I take no part in negotiating the loan or in advising on the loan itself. If the collateral is a securities account, I do not advise on the securities either. It is always the bank that accepts or declines.

What about Spain?

In Spain, the same mechanism exists under the name "préstamo lombardo": a loan secured by a pledge over securities or over a policy, offered mainly by private banks. For a Spanish resident buying in Spain, the HCSF criteria do not apply, but the Spanish tax treatment of the pledged policy and the reporting obligations must be checked before signing. See my page on expats in Spain.

What I review with you before any introduction

My analysis covers your wealth and the policy given as collateral, not the loan itself, which is the bank's business.

• The repayment plan: where will the capital come from at maturity?
• The safety margin: how much margin would be left after a sharp market fall, rather than the maximum the bank might offer.
• The pledged policy or assets: diversification, liquidity, currency; for a securities account, I limit myself to observations, without advice on the securities.
• The crisis scenario: what happens if equities lose a third?
• The cost of a withdrawal: what a withdrawal from your policy would cost, to compare with the total cost the bank will quote you.
• The questions to ask the bank: purpose of the loan and application of the HCSF criteria, country of the property and country of residence, margin call threshold, time allowed to respond, cases in which the collateral is enforced, renewal conditions. Its written answers are what count.

The mistakes I see most often: borrowing the maximum the bank offers, pledging a single concentrated position, financing an illiquid asset with no exit plan, and believing a Lombard loan is a tax trick.

Key takeaways

• A Lombard loan lends against the value of your investments after a haircut, without selling them.
• The rate is usually variable: Euribor + margin (3-month Euribor: around 2.6% in September 2026).
• The central risk is the margin call: use only part of your capacity.
• It is not automatically outside the HCSF criteria when it finances a home.
• It defers tax on gains; it does not eliminate it.

Official sources

• Légifrance – Decision no. D-HCSF-2021-7 of 29 September 2021 on the conditions for granting home loans (in French)
• Légifrance – Article 3 of decision D-HCSF-2021-7 (scope) (in French)
• Légifrance – HCSF decision of 29 June 2023 (allocation of the flexibility margin) (in French)
• Légifrance – HCSF decision of 18 December 2023 (bridging loans, renovation works) (in French)
• ORIAS – Ordinance no. 2016-351 of 25 March 2016 (text of article L. 313-1 of the French Consumer Code) (in French)
• Légifrance – Article L. 132-10 of the French Insurance Code (pledge of a life insurance policy) (in French)
• ECB Data Portal – 3-month Euribor, monthly average (series FM.M.U2.EUR.RT.MM.EURIBOR3MD_.HSTA)
• BOFiP – BOI-RFPI-BASE-20-80: rental income, loan interest and borrowing costs (in French)
• Service-Public.gouv.fr – Life insurance: taxation of gains on withdrawal (fact sheet F22414, checked on 15 April 2026) (in French)
• French National Assembly – Information report no. 2983 on the impact of the debt-to-income ratio set by the HCSF (24 June 2026) (in French)
• economie.gouv.fr – HCSF measure on the granting of home loans (20% flexibility, of which 70% for main residences) (in French)
• impots.gouv.fr – Furnished lettings: tax regimes (conditions for deducting actual expenses, updated on 8 April 2026) (in French)

Texts checked on 29 October 2026. This content is for information only and does not replace a review of your situation.