Lombard loan simulator: access liquidity without selling your assets

Simulate your Lombard loan

The simulator calculates borrowing capacity based on the loan-to-value ratio and interest costs. Your data is neither stored nor transmitted.

Why borrow against your wallet rather than sell it?

Selling assets to obtain cash has two hidden costs that are systematically underestimated: capital gains tax, which immediately reduces the proceeds of the sale, and the abrupt halt to capital appreciation, which deprives the capital of all its future years of growth. For established financial assets, these two costs often far exceed those of taking out a loan.

Lombard lending circumvents these two pitfalls. The bank advances you a fraction of the value of your portfolio—the loan-to-value (LTV), often 50 to 70% depending on the nature of the assets—which you pledge as collateral. Your securities remain yours, retain their tax advantages, and continue to generate returns. You only pay the interest; the principal is repaid at maturity, either through a chosen sale or a cash inflow. It is a liquidity management tool, not a consumer loan.

This mechanism underpins the "Buy, Borrow, Die" strategy for large estates: assets are acquired, borrowed against to finance projects without ever being sold—thus avoiding any tax liability—and the transfer upon death eliminates any unrealized capital gains. The Lombard loan is the central building block, but it's also a strategy that doesn't forgive imprudence.

The leverage effect of Lombard loans — and the risk of margin calls that must be faced head-on

Leverage, a value creator under certain conditions

As long as your portfolio yields more than the loan rate, leverage creates value: you invest or spend without divesting, and the difference between the return on your assets and the cost of borrowing benefits you. At a rate of 4,% for a more diversified portfolio, the differential works in your favor. But this advantage rests on an assumption of return that is never guaranteed: this is the first thing to remember.

The risk of a margin call, which must be faced head-on.

The downside is real and must be addressed clearly: if the value of the pledged portfolio falls, the bank can demand additional collateral—a margin call—or proceed with the partial liquidation of your assets, potentially at the worst possible time, when the market is down. An overly aggressive leverage ratio then turns leverage into a trap: the decline forces you to sell precisely when you shouldn't. This is the scenario that any serious strategy must anticipate.

The discipline that secures the assembly

The Lombard loan is a tool for sophisticated investors, to be used with a prudent allocation—below the maximum offered by the bank—and a diversified portfolio that absorbs shocks. The safety margin between the chosen allocation and the margin call threshold is what separates controlled leverage from unreasonable risk-taking. Its implementation must be part of a comprehensive wealth management strategy: financing a project, optimizing inheritance, and implementing a well-defined and appropriately scaled buy-borrow-die strategy.

Case study: Hélène, 61 years old, financial assets established in Paris

Hélène holds a diversified portfolio of €500,000 that she does not wish to sell—significant unrealized capital gains, capital she wants to pass on. To finance the purchase of a property, she is taking out a Lombard loan with a loan-to-value ratio of 50% at a rate of 4%. Here is the result from the loan simulator:

By borrowing rather than selling, Hélène avoids immediate capital gains tax and retains her entire invested portfolio, which continues to generate returns while she finances her project. As long as this portfolio yields more than the 4 % of the loan, the leverage works in her favor.

The prudent condition is explicit: with a loan-to-value ratio of 50 %, Hélène maintains a comfortable safety margin before any margin call. Had she borrowed at 70 %, a market correction could have triggered a request for additional guarantees, or even forced liquidation. It is this prudent loan-to-value ratio, and not the amount borrowed, that secures the arrangement.

A powerful lever is only worthwhile when properly framed.

This simulator calculates your borrowing capacity and the cost of interest. The key lies in the sizing: the loan-to-value ratio chosen in light of your portfolio's volatility, the safety margin before margin calls, and how the Lombard loan fits into your overall strategy—project financing, optimizing succession planning, or a buy-borrow-die approach. A poorly calibrated Lombard loan can turn an advantage into a risk; when properly structured, it is one of the most effective tools for established portfolios.

Balmont Conseil is an objective wealth management firm, a member of ANACOFI, with no capital ties to any bank. This objectivity allows us to structure financing—choosing between amortizing, bullet, and Lombard loans depending on your objective—and to tailor the loan amount solely to serve your best interests, free from the commercial pressures of a lender. Let's make an appointment to frame your setup and its safety margin.

Frequently Asked Questions

How does a Lombard loan work?

You pledge a financial portfolio—assurance-vie, securities account—as collateral, and the bank advances you a fraction of its value: the loan-to-value (LTV), often 50% to 70% depending on the nature of the assets. Your securities remain yours and continue to accrue interest; you only pay the interest, with the principal repaid at maturity. It's a cash advance secured against your assets, which mobilizes liquidity without selling or interrupting the capitalization of your assets.

What is margin call risk?

This is the core risk of Lombard loans, and it must be addressed head-on. If the value of the pledged portfolio falls below a certain threshold, the bank may demand additional collateral—a margin call—or proceed with the partial liquidation of your assets, sometimes at the worst possible time. A prudent allocation, below the maximum offered, and a diversified portfolio constitute the safety margin that separates controlled leverage from unreasonable risk-taking.

Why does the Lombard avoid capital gains tax?

Because borrowing isn't selling. As long as you don't transfer ownership of your assets, no capital gain is realized, and therefore no tax is triggered: you obtain liquidity while preserving the tax advantages and capitalization of your portfolio. This is the principle of the "Buy, Borrow, Die" strategy: acquire assets, borrow against them without ever selling, and let the transfer of assets upon death eliminate any unrealized capital gains.

Who is Lombard credit for?

For established and sophisticated financial assets, with a sufficiently diversified portfolio to absorb market shocks. It's a liquidity management tool—for financing a project, optimizing a transfer of assets—and not a consumer loan. It requires a prudent allocation, a clear understanding of margin call risk, and integration into a comprehensive wealth management strategy. Poorly calibrated, it becomes dangerous; properly sized, it is remarkably effective.

Why go through Balmont Conseil for a Lombard?

Balmont Conseil is an objective wealth management firm, a member of ANACOFI, with no capital ties to any bank. We structure a loan, a secured portfolio, and the risk of margin calls to be managed: we determine the loan-to-value ratio and safety margin solely in your best interest, free from the commercial pressures of a lender who might push for maximum leverage. Brokerage and structuring are conducted to serve your wealth, not the bank's profit margin.