Quick answer
A share portfolio loan lets you borrow against shares, ETFs or funds you already own instead of selling them. The portfolio is the security, so a fall in its value can trigger a call to top up or repay. Ownright Custom Finance does not typically arrange these loans, but we can look at property-secured and other options that may achieve the same goal.
Key points
- Your shares stay in your name but act as security
- Falling markets can trigger a call to repay or top up
- Selling can bring capital gains tax, which is one reason people borrow instead
- Property or business assets can sometimes raise the same funds on steadier terms
- Suits
- Investors who want cash but prefer not to sell holdings
- Security
- The share or fund portfolio
- Ownright's role
- We do not typically arrange these; we look at alternatives
- Australia-wide
- Yes
What is a share portfolio loan?
A share portfolio loan is borrowing secured by investments you already hold. Instead of selling shares to raise cash, you pledge them to a lender, who advances a portion of their value. You keep ownership and any returns, while the lender holds a security interest.
The best-known version in Australia is the margin loan, which MoneySmart explains in detail. Our page on margin loans and securities lending covers how margin calls work.
Why do people borrow against shares instead of selling?
- To avoid selling during a market dip
- To keep exposure to a long-term holding
- To avoid or defer a capital gains tax bill that a sale may trigger (the ATO explains how capital gains tax works)
- To bridge a short-term need without disturbing the portfolio
- To fund another investment or a business opportunity
None of these is a recommendation. Tax outcomes are personal, and your accountant should weigh in before you act.
What are the risks of using shares as security?
The headline risk is the margin call. Share prices move daily, so the lender’s cover can disappear quickly. If the portfolio falls and you cannot respond, the lender may sell holdings at the low point, which turns a paper loss into a real one.
Other risks:
- Concentrated portfolios with a few large holdings are riskier security
- Interest continues whether markets rise or fall
- Dividends may not cover the cost of the loan
- Borrowing can reduce what other lenders will let you borrow later
Share security versus property security
| Question | Shares as security | Property as security |
|---|---|---|
| How quickly does the value move? | Daily | Usually gradually |
| Can the lender call for more security? | Often yes | Not typically, unless a covenant is breached |
| What is at stake if things go wrong? | The portfolio | The property |
| Who usually offers it? | Specialist investment lenders | Banks, non-banks and private lenders |
| Documentation | Holding statements | Title, valuation, income evidence |
What do lenders look at?
For portfolio-secured lending, lenders examine the quality and spread of the holdings, how liquid they are, your income and your other debts. For property-secured lending, they look at the property, its loan to value ratio, and whether you can afford the repayments.
Self-managed super funds have their own rules. If your shares sit inside an SMSF, see SMSF borrowing and SMSF property loans, and speak with a specialist.
How can Ownright help?
Share portfolio loans are not something Ownright Custom Finance typically arranges, and we are upfront about that. We are credit assistance specialists with a long track record of finding unusual routes to finance. Trevor Scott has more than four decades in the industry, and the team works for clients in every state and territory.
If you also own property, we can look at drawing on it instead. A home equity loan or a second mortgage may raise the same funds without touching your portfolio. Timing varies with the lender, the security and the pace of paperwork, and we do not make promises about speed. If you want to explore it, start with a short application and we will respond with what looks realistic.
An illustration
Illustrative scenario only. A long-term investor needs funds for a business opportunity but does not want to sell a portfolio built over decades. A portfolio-secured loan is one idea. Another is a short-term loan against an investment property with a clear plan to repay from a business return. The right answer depends on income, existing debts, the property’s equity and the investor’s tolerance for risk.
Mistakes to avoid
- Borrowing at the maximum, with no buffer for a downturn
- Treating dividends as certain repayment income
- Ignoring the tax angle until after the loan is signed
- Applying to several lenders in quick succession
- Mixing up personal and SMSF holdings
Documents to have ready
- Photo ID
- Recent holding and loan statements
- Latest tax returns and notices of assessment
- A schedule of assets and debts
- Property title and rates notice if property will be security
Our guide on what documents you need for a loan has a fuller list.
Who offers portfolio-secured lending?
Mostly specialist investment lenders and some private-wealth providers. Mainstream home-loan lenders generally do not lend against listed investments in the same way. Eligibility depends on which shares or funds you hold, because lenders usually approve a list of securities and accept some at a lower proportion than others. Smaller companies and concentrated holdings are often accepted at less. Ownright does not typically arrange this lending, so for the investment side you would deal with an investment lender or adviser directly.
What if the money is for a property or business?
That is where our knowledge is stronger. If the purpose is a deposit, a settlement gap or business cash flow, the property or business may be a better source of security than a share portfolio. Our pages on investment property loans and short-term mortgages explain how those structures work. A business loan secured against property is another route, and which fits best depends on timing, amount and the repayment plan.
What about borrowing from within a family trust or company?
Holdings owned by a trust or company can sometimes support borrowing in that entity’s name, but the lender will want to see the structure, the trustee or director authority and the trust deed. Personal guarantees are common. If your investments sit in a trust, see our page on trust borrowing and bring the deed along when you speak with us.
How do you keep the downside manageable?
- Borrow well under the lender’s maximum
- Keep a cash buffer for a call
- Diversify rather than relying on one stock
- Have a plan for repaying the loan, not just servicing interest
- Review the arrangement whenever your income or goals change
None of this is advice tailored to you. It is a checklist of questions to take to an adviser and accountant before you sign anything.
Ready to look at borrowing against what you own?
Sounds like you want to raise funds against your assets without selling your shares. We’re the lending experts at finding secured finance that suits, so click the button below and see if you qualify.
How it works, step by step
- 1
Step 1
Tell us why you need the funds and how quickly.
- 2
Step 2
We review your holdings alongside any property, business or other assets.
- 3
Step 3
We outline lending that may suit, from equity release to short-term private finance.
- 4
Step 4
You compare the trade-offs, ideally with your accountant, before deciding.
Frequently asked questions
Can I borrow against my shares without selling them?
Yes, through specialist products such as margin loans or other portfolio-secured facilities, usually offered by investment-focused lenders. The shares stay in your name but are held as security. Ownright does not typically arrange these, though we can look at other secured options if you own property or business assets.
Why would someone borrow against shares instead of selling?
Common reasons include avoiding a sale at a bad moment, keeping exposure to the market, or sidestepping capital gains tax that a sale could trigger. These are tax and investment questions rather than lending ones, so speak with an accountant or licensed adviser about your situation.
What happens if my share prices fall?
If the loan is secured by the shares and their value drops, the lender may ask you to pay down the loan, add assets or sell shares, sometimes within a day or so. If that is not done, the lender may sell for you. This is the main risk of portfolio-secured borrowing.
Do lenders accept SMSF-held shares?
Generally, no. Borrowing rules for self-managed super funds are tightly restricted, and shares held in an SMSF can't usually be used as security for a personal loan. SMSF borrowing is a specialist area, covered on our SMSF pages, and an adviser should be involved.
Is a loan secured by property safer than one secured by shares?
They carry different risks. Property values usually move more slowly than share prices and there is no margin call, but the property is at risk if repayments are missed. Neither is risk-free, and the better fit depends on your income, debts and goals.
What documents will a lender want?
Expect ID, holding statements, recent tax returns, a list of assets and debts and details of how the funds will be used. For property-secured finance, add title, rates and loan statements. We can walk you through the full list before you apply so nothing delays the process.