Most high-earning expats are sitting on a significant financial advantage they’ve never been told about. It’s not a product. It’s not a strategy. It’s a question nobody asks before making one of the most common and costly decisions wealthy families make: selling investments to fund something else.
Understanding why that’s often the wrong move, and what to do instead, is worth more than most people realise.
The decision most wealthy clients get wrong
Take a typical scenario. A high-earning expat couple, both professionals, have spent years building a significant investment portfolio in a low-tax jurisdiction. They’ve done everything right. Now they’re thinking about retirement and have their eye on a property back in the UK. The instinct is straightforward: sell some investments, use the proceeds, get a mortgage for the rest.
It feels sensible. It’s often the wrong move.
Selling investments to fund a property purchase in a high-tax jurisdiction creates a cascade of consequences most clients haven’t modelled. There are stamp duty and transaction costs on the way in. Potential capital gains exposure on the way out. The investments that were sold stop compounding. The mortgage rate is often higher for overseas buyers. And the property itself, if it’s partly a lifestyle purchase rather than a pure investment, carries ongoing costs that erode the original rationale.
All of this happens not because the decision was reckless, but because the full picture wasn’t mapped out before the commitment was made. Emotional decisions, even reasonable-sounding ones, tend to be expensive when the numbers are eventually run.
A tool most clients have never heard of
A Lombard loan is a loan secured against an existing investment portfolio. Rather than selling investments to access capital, the client borrows against them, keeping the portfolio intact and invested while releasing liquidity for whatever purpose they need.
The concept isn’t new. The name traces back to the Lombards, a community who settled in northern Italy in the sixth century and became known across medieval Europe for their lending practices. The modern version is a standard product offered by private banks and wealth managers to high-net-worth clients. And yet, in over two decades of working with successful international families, I find most of them have never come across it.
Going back to the couple considering the UK property: instead of selling a million dollars of investments and taking a conventional mortgage, they use their portfolio as security for a Lombard loan. The investments stay in place. The compounding continues. The loan is typically available quickly, often without a property valuation, and can be competitively priced compared with conventional property-backed lending because the security, a liquid investment portfolio, is easier for a lender to realise if needed.
The difference in outcome over fifteen years, purely from keeping the investments compounding rather than liquidating them, can be considerable. That’s not a minor planning detail. It’s a fundamentally different financial trajectory.
How it works in practice
Lombard loans are generally structured against diversified, high-quality investment portfolios held with a bank or wealth manager. Loan-to-value ratios are kept conservative, typically around fifty percent of the portfolio’s value, which provides meaningful headroom if markets move against the client.
They’re used for a wide range of purposes beyond property. Funding business opportunities. Bridging finance while waiting for a bonus, inheritance or insurance payment. Helping adult children with a first home purchase. Diversifying into other asset classes without disrupting an existing portfolio structure.
For expat clients in particular, Lombard lending often solves problems that conventional finance can’t. Traditional mortgages for overseas buyers can be slow, restrictive or simply unavailable in certain jurisdictions. A Lombard loan secured against an existing portfolio can move considerably faster and with fewer structural complications.
The risks clients need to understand
Lombard lending isn’t without risk, and advisers should be clear about this with clients.
If portfolio values fall significantly, the lender may require partial repayment or additional security. This is manageable if the loan-to-value ratio is kept conservative and the client has other assets in reserve, but it’s a genuine risk that needs to be stress-tested rather than assumed away. Clients also need sufficient income to service the interest payments comfortably over time, and the tax position of the underlying investments needs specialist review before any structure is put in place.
Used thoughtfully, within a broader wealth plan and with appropriate headroom, Lombard lending is a genuinely powerful tool. Used carelessly, it carries real risk.
The broader principle
The Lombard loan conversation is really a proxy for a larger one. How well do your clients understand the full range of options available to them before they make significant financial decisions?
The most costly mistakes I’ve seen across two decades weren’t made by people who lacked wealth or intelligence. They were made by people who didn’t know what they didn’t know. Who made large, irreversible decisions without first mapping the alternatives.
That’s the conversation worth having. Not just about Lombard loans, but about the full picture of how wealth can be structured, accessed and preserved across the different chapters of a client’s financial life.
Sam Instone is CEO of AES International, the only CEFEX-certified fiduciary firm across the Middle East, Asia, and Africa.
Capital at risk. Any examples used are for illustrative purposes only, and you may get less back than the figures shown. Any financial promotions are intended for information purposes only and do not constitute an offer to invest or provide personal financial advice or tax advice. We do not take any responsibility for third-party websites and content linked to from this channel. Issued on behalf of AES Middle East Insurance Broker LLC, registered with the Ministry of the Economy, licence 571368, commercial registration 75162, regulated by the UAE Central Bank, licence no. 189. This material is intended for Retail Clients within the UAE.
