In short…
The Lombard loan is a cash advance secured by pledging a financial portfolio — life insurance, a securities account. It lets you raise liquidity without selling your assets, so without triggering capital-gains tax, while letting your capital keep working. It is the heart of the “Buy, Borrow, Die” strategy. A powerful tool, it demands absolute clarity on the risk of a margin call. The simulator works out your borrowing capacity from the loan-to-value and the interest cost.
- Liquidity without selling: no capital-gains tax is triggered
- Capital preserved: your assets stay invested and keep producing
- Positive leverage as long as your portfolio’s return exceeds the loan rate
Simulate your Lombard loan
The simulator works out the borrowing capacity from the loan-to-value and the interest cost. Your data is neither stored nor transmitted.
Lombard loan simulator
Raise liquidity by pledging your portfolio, without selling and without triggering any tax.
Results are provided for purely illustrative and educational purposes, based on the parameters you enter and simplified assumptions (2026 taxation, constant return, excluding inflation). They constitute neither personalised investment advice, nor tax advice, nor an offer to subscribe. Some investments carry a risk of capital loss. Before any decision, speak with an advisor.
Why borrow against your portfolio rather than sell it
Selling assets to raise liquidity carries two hidden costs that are systematically underestimated: capital-gains tax, which immediately eats into the sale proceeds, and the abrupt halt to compounding, which strips the capital of all its future years of growth. For an established financial estate, these two costs often far exceed that of a loan.
The Lombard loan sidesteps both pitfalls. The bank advances you a fraction of your portfolio’s value — the loan-to-value, or LTV, often 50% to 70% depending on the nature of the assets — which you pledge as security. Your holdings remain yours, keep their tax seniority and continue to produce. You pay interest only; the capital is repaid in fine, on a chosen resale or a cash inflow. It is a liquidity-management tool, not a consumer loan.
It is on this mechanism that the “Buy, Borrow, Die” strategy of substantial estates rests: you acquire assets, borrow against them to finance your projects without ever selling — so without ever triggering tax — and the transmission on death wipes out the latent capital gains. The Lombard loan is its central building block, but it is also a strategy that does not forgive carelessness.
The leverage of the Lombard loan — and the margin-call risk you must face squarely
Leverage, a value creator under conditions
As long as your portfolio earns more than the loan rate, the leverage effect creates value: you invest or consume without divesting, and the gap between your assets’ return and the cost of borrowing accrues to you. At a 4% rate for a diversified portfolio targeting more, the differential works for you. But this advantage rests on a return assumption that is never guaranteed: that is the first thing not to forget.
The margin-call risk, faced squarely
The flip side is real and must be stated plainly: if the value of the pledged portfolio falls, the bank can demand additional security — the margin call — or proceed to the partial liquidation of your assets, potentially at the worst moment, at the bottom of the market. An overly aggressive loan-to-value then turns leverage into a trap: the fall forces you to sell exactly when you should not. This is the scenario any serious arrangement must anticipate.
The discipline that secures the arrangement
The Lombard loan is a tool for informed estates, to be used with a prudent loan-to-value — below the maximum the bank offers — and a diversified portfolio that cushions shocks. The safety margin between the chosen loan-to-value and the margin-call threshold is what separates controlled leverage from unreasonable risk-taking. Setting it up must be framed within an overall wealth logic: financing a project, optimising transmission, an assumed and sized Buy-Borrow-Die strategy.
Worked example — Hélène, 61, an established financial estate in Paris
Hélène holds a diversified portfolio of €500,000 she does not wish to sell — large latent gains, capital she means to pass on. To finance the acquisition of a property, she draws a Lombard loan at 50% loan-to-value, at a 4% rate. Here is the simulator’s reading:
| Indicator | Selling assets | Lombard loan (LTV 50%) | Reading |
|---|---|---|---|
| Liquidity raised | ≈ €250,000 | ≈ €250,000 | same sum available |
| Capital-gains tax triggered | ≈ €30,000+ | €0 | no disposal |
| Annual interest cost | — | ≈ €10,000 / yr | interest only, in fine |
| Capital that keeps working | €0 | €500,000 | portfolio preserved |
Illustrative figures — rounded for clarity and not contractual. Run the simulator above for your exact numbers.
By borrowing rather than selling, Hélène avoids the immediate tax on her gains and keeps her entire portfolio invested, which continues to produce while she finances her project. As long as that portfolio earns more than the loan’s 4%, leverage plays in her favour.
The prudence condition is explicit: at 50% loan-to-value, Hélène keeps a comfortable safety margin before any margin call. Had she borrowed at 70%, a market correction could have triggered a demand for additional security, or even a forced liquidation. It is this prudent loan-to-value, not the amount borrowed, that secures the arrangement.
Borrow rather than sell
Selling assets to raise liquidity triggers capital-gains tax and halts compounding. The Lombard loan sidesteps both pitfalls: the bank advances you a fraction of your portfolio’s value (the loan-to-value, or LTV, often 50% to 70% depending on the assets), which you pledge as security. Your holdings remain yours and keep producing.
You pay interest only; the capital is repaid in fine, for example on a chosen resale of an asset or a cash inflow. It is a liquidity-management tool, not a consumer loan.
Leverage and margin-call risk
As long as your portfolio earns more than the loan rate, leverage creates value: you invest (or consume) without divesting. But the risk exists: if the value of the pledged portfolio falls, the bank can demand additional security (a margin call) or the partial liquidation of the assets.
The Lombard loan is therefore a tool for informed estates, to be used with a prudent loan-to-value and a diversified portfolio. Setting it up must be framed with an advisor, within an overall wealth logic (financing a project, optimising transmission, a Buy-Borrow-Die strategy).
A powerful lever is only worth as much as its framing
This simulator prices your borrowing capacity and the interest cost. The essentials lie in the sizing: the loan-to-value chosen against your portfolio’s volatility, the safety margin before a margin call, and how the Lombard loan fits your overall strategy — financing a project, optimising transmission, a Buy-Borrow-Die logic. A poorly calibrated Lombard loan turns an advantage into a risk; well framed, it is one of the most effective tools of established estates.
Balmont Conseil is an independent wealth-management firm, a member of ANACOFI, with no capital ties to any bank. That independence lets us structure the financing — choosing between repayment, interest-only and Lombard routes to suit the objective — and size the loan-to-value in your sole interest, free of a lender’s commercial appetite. Book a call to frame your arrangement and its safety margin.
Frequently asked questions
How does a Lombard loan work?
You pledge a financial portfolio — life insurance, a securities account — as security, and the bank advances you a fraction of its value: the loan-to-value, or LTV, often 50% to 70% depending on the nature of the assets. Your holdings remain yours and keep producing; you pay interest only, the capital being repaid in fine. It is a cash advance backed by your estate, raising liquidity without selling or interrupting your assets’ compounding.
What is the margin-call risk?
It is the central risk of the Lombard loan, and it must be faced squarely. If the value of the pledged portfolio falls below a certain threshold, the bank can demand additional security — the margin call — or proceed to the partial liquidation of your assets, sometimes at the worst moment. A prudent loan-to-value, below the maximum offered, and a diversified portfolio form the safety margin that separates controlled leverage from unreasonable risk-taking.
Why does the Lombard loan avoid capital-gains tax?
Because borrowing is not selling. As long as you do not dispose of your assets, no gain is realised, so no tax is triggered: you obtain liquidity while keeping your portfolio’s tax seniority and compounding. This is the principle of the “Buy, Borrow, Die” strategy: acquire, borrow against your assets without ever selling, and let the transmission on death wipe out the latent gains.
Who is the Lombard loan for?
For established, informed financial estates with a diversified portfolio large enough to absorb market shocks. It is a liquidity-management tool — financing a project, optimising transmission — not a consumer loan. It assumes a prudent loan-to-value, a clear understanding of the margin-call risk and framing within an overall wealth strategy. Poorly calibrated, it becomes dangerous; well sized, it is formidably effective.
Results are provided for purely illustrative and educational purposes, based on the parameters you enter and simplified assumptions (2026 taxation, constant return, excluding inflation). They constitute neither personalised investment advice, nor tax advice, nor an offer to subscribe. Some investments carry a risk of capital loss. Before any decision, speak with an advisor.