Ultra-low interest rates and the banks' current aversion to cash offer plenty of reasons to look for alternatives to take advantage of an interesting investment opportunity. Foreign real estate is also gaining in popularity, but what is the best way to finance such a purchase? After all, you can only borrow to buy foreign property if you yourself own property in Belgium that can serve as collateral. Thanks to a Lombard loan, it is nevertheless possible to borrow for foreign real estate without giving real estate as collateral.
The Lombard Credit is therefore a relatively common method for buying (investment) property. Especially in the case of a purchase of property abroad it is an interesting financing method. A good reason to look into it.
What is a Lombard loan?
A Lombard loan is an investment opportunity where an investment portfolio (or part of it) can be used as collateral to take out a loan, creating opportunities to purchase real estate, for example. This is therefore a form of credit that offers opportunities to create financial leverage. So it is possible to borrow with a securities portfolio as a basis and to continue to hold it. So there is no choice but to take advantage of both options. You can keep your entire securities portfolio (by pledging them) and opt for an interesting real estate investment, such as workers' houses in Terneuzen. Feel free to call it maximising opportunities.
Growing popularity of Lombard loans
We have already partly explained the growing popularity of Lombard loans above. By opting for this form of lending, whose name refers to the medieval money traders in Lombardy, Italy, there is no need to choose between various investment options.
Another reason for the growing popularity of Lombard loans is that Belgian investors are increasingly experiencing bank resistance when taking out a loan for foreign real estate. In many cases, real estate in Belgium is required to be given as collateral. Real estate from other countries is often not accepted by the bank. As no notarial deed rests on a Lombard loan, banks do not have optimal control over it. As a result, these financial institutions show no interest in this form of credit.
Private banks and asset managers offering Lombard loans often find that this offer is increasingly seen as an interesting alternative. Customer interest in Lombard loans with securities as collateral has grown substantially recently.
Lombard loans as a flexible financing instrument for real estate investments
Lombard loans can be seen as a flexible financing instrument for real estate investments. This is because there are fewer costs associated with this type of credit compared to other structures. Unlike with a mortgage loan, there are no notary fees to be paid. After all, a Lombard loan is considered an instalment loan.
The flexible side of this property investment finance instrument is also reflected in the agreed construction itself. Maturities are often much shorter than those of mortgage loans. Lenders have complete freedom to decide how long such a loan may run at most. Arrangements regarding repayment terms can be determined in consultation with the customer. Here, a monthly repayment can be chosen but shaping other constructions are also among the possibilities. Among others, a bullet credit can be chosen where interest is paid at regular intervals and the capital will be repaid only when the credit expires. The amount customers can borrow depends on the term of the credit and the quality of the investment portfolio.
More information or personalised advice on Lombard financing
Lombard financing is thus a form of tailor-made lending. How this form of lending is designed and deployed can vary from lender to lender. The fact is that Lombard financing can be a quick and effective source of liquidity where you can enjoy the benefits of return maximisation and risk diversification. In addition, a Lombard loan can be an excellent part of your family wealth planning.
In view of the above reasons, this form of credit may be particularly relevant for you as a potential real estate investor with MOMO estates. Are you interested in taking stock of your options in this regard? Discover our offer in foreign real estate and find out more about all financing options in a personal meeting.