How to Borrow Against Offshore Assets

Borrowing against offshore assets can be a smart way to unlock liquidity without selling investments, triggering tax, or disclosing more than you need to in a local market. Done well, it’s efficient, discreet, and relatively fast. Done poorly, it can entangle you in avoidable tax, margin calls, and enforcement headaches across multiple jurisdictions. I’ve structured and negotiated dozens of these facilities for clients and family offices, and the difference between a smooth transaction and a messy one usually comes down to planning, documentation, and picking the right lender for the asset.

What “borrowing against offshore assets” actually means

Put simply, you pledge assets held outside your home country—think securities in a Swiss account, a villa owned by a BVI company in Spain, or a yacht registered in the Cayman Islands—as collateral for a loan from an international bank or specialist lender. The loan can be used for almost anything: acquiring property, bridging a liquidity event, investing in a business, diversifying a portfolio, even paying a tax bill.

Why use leverage offshore rather than at home?

Privacy and convenience: If the assets and the lender are already offshore (e.g., in Switzerland or Singapore), it’s faster to pledge them there.

Tax positioning: You might be able to borrow in a jurisdiction with no withholding taxes on interest and more flexible security laws.

Investment continuity: You keep your investments intact while accessing cash, which can be cheaper than selling and later buying back.

Who typically uses these structures?

International entrepreneurs with multi-jurisdiction holdings

Family offices and trusts

Non-resident property owners

Active investors looking to amplify returns while keeping core holdings intact

Industry estimates suggest offshore financial wealth exceeds $10 trillion globally, concentrated in booking centers such as Switzerland, Singapore, Hong Kong, Luxembourg, and the Channel Islands. A significant slice is marginable—particularly marketable securities—making it ideal for secured lending.

What you can pledge (and realistic advance rates)

Lenders care about three things: liquidity of the collateral, enforceability of the security, and price volatility. The more liquid and stable the asset, the higher the advance rate.

Marketable securities (Lombard or pledged asset lines)

Typical LTV: 40–90%, depending on asset class and diversification

Cash and short-term government bonds: 85–95%

Investment-grade bonds: 60–85% (higher duration or lower rating reduces LTV)

Blue-chip equities/ETFs: 50–70% (concentrated positions may drop to 20–40%)

Hedge funds/mutual funds: 40–60% (redemption terms matter)

Pricing: Often benchmark (SOFR/Euribor/SONIA) + 1.0–2.5% for strong portfolios; higher for concentrated or less liquid books.

Notes: Daily mark-to-market and margin calls; best suited for borrowers with liquidity buffers and a tolerance for volatility.

Professional tip: Ask for a concentration schedule as part of the eligibility criteria (e.g., no single issuer over 10–15% of portfolio value), so you’re not surprised by sudden haircut changes.

Offshore real estate

Typical LTV: 50–65% of appraised value

Pricing: Usually benchmark + 2.0–4.5% depending on location, title clarity, and rental income

Notes: Lenders prefer properties in established legal jurisdictions with reliable land registries and ease of enforcement (e.g., UK, Spain, Portugal, France, UAE). For properties owned through an SPV (BVI/Cayman/Luxembourg), expect both a mortgage over the property and a share charge over the SPV.

Cash/deposits

Typical LTV: 90–100% (depending on whether deposit is with the same bank)

Pricing: Very tight spreads; sometimes a “back-to-back” structure where the deposit and loan move in lockstep.

Notes: Useful for short-term needs or ring-fencing purposes.

Private company shares (unlisted)

Typical LTV: 0–40%

Pricing: Expensive relative to banks; specialty lenders may quote benchmark + 5–10% with warrants or fees.

Notes: Enforceability, minority protections, and shareholder agreements drive terms. These deals are bespoke and slower.

Fund interests and capital call/NAV loans

Typical LTV: 25–50% on diversified fund portfolios; 10–30% for single PE fund NAV lending

Pricing: Benchmark + 3–6%; depends on manager quality, liquidity terms, and look-through leverage

Notes: Lenders focus on fund documents, transfer restrictions, and consent rights.

Yachts and aircraft

Typical LTV: 45–60%

Pricing: Benchmark + 3–6%; large capex and maintenance reserve requirements

Notes: Flagging/registration, insurance assignments, and technical management are key. Asset value can drop fast without proper upkeep.

Art and collectibles

Typical LTV: 30–50% of auction-house valuation for blue-chip, museum-quality works

Pricing: Benchmark + 5–9%

Notes: Storage in bonded warehouses/freeports, provenance, title due diligence, and insurance are critical. Liquidity risk is real.

Crypto assets (caution)

Typical LTV: 20–50% with specialized lenders

Pricing: Highly variable; frequent margining

Notes: Mainstream banks usually won’t lend against crypto held offshore due to compliance and volatility. If you must, cap exposure and ring-fence risk.

Who lends against offshore assets

Different lenders play in different niches. Shop the market intelligently rather than blasting a generic request.

Global private banks: Best for Lombard loans against securities and cash. They prefer custody at the same bank for control. Switzerland, Monaco, Singapore, Hong Kong, and Luxembourg desks are active.

International mortgage lenders: For cross-border property loans, look for banks with dedicated international mortgage teams covering your property’s jurisdiction.

Non-bank specialty lenders: Useful for art, yachts, aircraft, and private-company shares. Expect higher rates and more structure (covenants, reserve accounts).

Local banks in the asset’s jurisdiction: If you own property in Spain through a BVI company, a Spanish lender may still be your most cost-effective option, though onboarding can be longer.

Broker-dealers and custodians: Some offer credit lines secured by portfolios (pledged asset lines), often with automated margining and good pricing.

I’ve had the best execution when assets, custodian, and lender sit in the same ecosystem. For example, pledging a Swiss-custodied securities portfolio to a Swiss private bank typically yields faster approvals, higher LTV, and better pricing than cross-custodian setups.

Choosing the right jurisdiction

Three locations matter: where the collateral is booked, where the borrower is incorporated, and where the lender books the loan. Misalign these, and you invite tax leakage, friction, and legal risk.

Collateral location: Securities in Switzerland or Singapore are easiest to margin with lenders in the same jurisdiction. Real estate law is always local, so you’ll deal with the property’s country.

Borrower entity: Many use a BVI or Cayman SPV, or a trust-owned SPV, for ring-fencing and transferability. Ensure the SPV is permitted to borrow and grant security under its constitutional documents.

Lender booking center: Follow the lender’s strengths. A Swiss or Luxembourg booking center is often efficient for European collateral; Singapore or Hong Kong for APAC.

Key considerations:

Withholding tax on interest: Some countries levy 5–25% unless a treaty or exemption applies. Structure the paying entity and loan location to reduce leakage.

Security perfection and enforcement: Can you register a share charge or mortgage easily? Will courts recognize foreign judgments or arbitration awards?

CRS/FATCA reporting: Expect automatic exchange of account and loan information to your tax authority. Don’t rely on secrecy; rely on compliance.

Sanctions and AML: Lenders will screen counterparties, counterparties to counterparties, and source of wealth. Clean, documented wealth closes deals.

Common loan structures

Lombard loans (pledged asset lines)

Secured by marketable securities at the lender’s custody.

Revolving credit or term loan; daily margining; margin calls when value falls.

Pros: Fast, flexible, low cost for liquid portfolios.

Cons: Volatility risk; lender control over custody and eligibility.

Cross-custodian pledge

Collateral held at a third-party custodian; lender takes a pledge and control agreement.

Pros: You keep your asset manager/custodian.

Cons: Lower LTV and higher margin; more legal work to perfect security.

Mortgages over offshore property

Traditional term loans secured by the property; often combined with a share charge over the owning SPV.

Considerations: Local valuation, insurance assignment, rental assignment, tax on interest and mortgage registration.

Repo or securities lending

Short-term financing secured by specific securities, title transfer to lender, agreed repurchase date.

Pros: Efficient for institutions/family offices with treasury function.

Cons: Operationally heavier; legal form matters for tax.

NAV and subscription/capital call facilities

NAV loans secured by fund interests; subscription lines secured by LP commitments (more for fund managers).

Pros: Tailored to PE/VC portfolios.

Cons: Costlier; tied to fund documents and consent rights.

Specialty asset finance

Yachts, aircraft, art: bespoke loans with technical covenants and inspections.

Pros: Raises cash without selling trophy assets.

Cons: Documentation demands and higher cost.

Recourse vs non-recourse

Full recourse: Lender can pursue you beyond the collateral.

Limited/non-recourse: Recovery limited to collateral. Expect lower LTV and higher spread if non-recourse.

Interest mechanics

Floating rate: Benchmark (SOFR/Euribor/SONIA) + margin; interest typically paid quarterly.

Fixed rate: Less common offshore but possible; watch break costs.

Options: Rate caps, collars, or swaps to manage exposure.

Step-by-step: how to execute cleanly

1) Define the objective and constraints

Amount, currency, tenor, repayment source

Tolerance for margin calls

Acceptable jurisdictions and privacy goals

2) Assemble your team early

Cross-border counsel (both collateral and borrower jurisdictions)

Tax advisor (interest deductibility, withholding, CFC)

A debt advisor or private banker to price-check the market

For real assets: valuation firms, surveyors, registrars

3) Pre-flight KYC and source-of-wealth pack

Certified passport and address documents

Corporate structure charts and registers of UBOs

Tax residency certificates; CRS/FATCA forms (e.g., W-8BEN/W-8BEN-E)

Bank statements and liquidity proofs

Evidence of wealth creation (company sale docs, dividend records, contracts)

4) Collateral preparation

Securities: Move to acceptable custodian; clean up concentrated positions or illiquid holdings to boost LTV.

Property: Up-to-date valuation, clean title, insurance, leases, property management records.

Specialty assets: Recent survey/appraisal, maintenance logs, insurance, registration.

5) Market sounding and lender shortlisting

Approach 2–4 lenders that fit the asset and jurisdiction.

Request preliminary LTV, pricing range, covenants, and onboarding timelines.

6) Negotiate the term sheet

LTV, eligibility schedule, margin triggers, cure periods

Pricing grid for different collateral types

Rehypothecation rights and withdrawal rights for the portfolio

Events of default, cross-defaults, permitted liens, negative pledge carve-outs

Reporting frequency and valuation rights

Use-of-proceeds constraints (if any)

7) Legal diligence and documentation

Facility agreement (LMA-style for larger deals)

Security documents: share charge, account pledge, mortgage, assignment of insurances and receivables

Intercreditor arrangements if multiple collateral pools or existing debt

Legal opinions: capacity, enforceability, perfection, and choice of law

Registrations: company registries (e.g., BVI register of charges), land registry, aircraft or ship registries

8) Tax structuring and filings

Assess withholding tax on interest and apply treaty relief or exemptions

Interest deductibility tests (thin capitalization/earnings stripping)

VAT/GST on fees where applicable

Economic substance filings for the borrower SPV if required

9) FX and rate hedging

Borrow in the same currency as the asset or liability where possible.

If not, use forwards or cross-currency swaps with collateralized CSAs to reduce basis risk.

Model worst-case interest scenarios; consider caps.

10) Closing and funding

Conditions precedent checklist: KYC complete, valuations, insurances, board resolutions, security perfected

Drawdown notice, funding mechanics, disbursement to target account

11) Ongoing management

Monitor LTV and maintain a liquidity buffer for margin calls

Update valuations and deliver covenanted reporting

Keep sanctions/UBO records current with the bank

Review rate and FX hedges regularly

Legal and regulatory checkpoints you can’t skip

KYC/AML and sanctions: Tighten documentation. If there’s a trust, you’ll need trust deeds, supplemental deeds, protector consents, and a clear trail of the settlor’s funds.

Security perfection:

Shares of a BVI company: Register share charge in the company’s register of charges and (ideally) with the BVI Registrar via a registered agent notice.

Bank accounts and portfolios: Account pledge and control agreement; custodian must acknowledge and freeze on default.

Real estate: Local mortgage registration, notarization, stamp duty, and sometimes foreign investment approvals.

Yachts/aircraft: Mortgage recorded in the relevant registry; assignment of insurances and charter income.

Recognition and enforcement: Choose governing law and courts/arbitration that your collateral jurisdiction recognizes. Ask your counsel for an enforceability memo early, not at the end.

Withholding tax and usury: Some countries cap interest rates or tax cross-border interest. Structure loan booking and paying entities accordingly.

CRS/FATCA: Expect the loan and collateral accounts to be reportable to your tax authority. Make sure your tax filings match the reality.

Trust-specific issues: Can the trustee grant security? Do the trust and letter of wishes permit borrowing? Will you need protector consent? Does a pledge risk a breach of fiduciary duty? Get trust counsel to sign off.

Economic substance and hallmarks: If using zero-tax SPVs, ensure they meet local substance requirements or qualify for exemptions. Certain cross-border structures may trigger reportable arrangements in the EU (DAC6).

Risk management that actually works

Currency mismatch: If your collateral is USD securities and your spending is in EUR, either borrow in USD and swap to EUR, or borrow in EUR if the lender allows. Don’t leave FX exposure unhedged hoping it averages out.

Rate risk: Floating rates have moved sharply in recent years. Price the impact of a 200–300 bps shock. Caps can be a sensible middle ground.

Concentration risk: A single-stock heavy portfolio can see overnight LTV jumps. Diversify or accept materially lower advance rates.

Margin policy: Maintain a cash buffer (often 10–20% of loan amount) in a pledged account to avoid forced selling in a down market. Negotiate reasonable cure periods (e.g., 2–5 business days).

Operational risk: Rehypothecation may lower your rates but can add counterparty risk. If allowed, cap it and carve out specific assets as “no-rehypo”.

Costs, timelines, and what to expect

Rates:

Lombard against blue-chip portfolios: benchmark + 1.0–2.0%

Cross-custodian or concentrated portfolios: benchmark + 2.0–3.5%

Offshore real estate: benchmark + 2.0–4.5%

Yachts/aircraft/art/private shares: benchmark + 4.0–9.0% (sometimes with upfront fees or equity kickers)

Fees:

Arrangement: 0.25–1.00% of commitment

Legal: $20k–$200k+ depending on jurisdictions and complexity

Valuation/survey: $3k–$50k per asset

Custody/control fees: small but recurring

Timelines:

Lombard with same-bank custody: 1–3 weeks if KYC is clean

Cross-custodian pledge: 3–6 weeks

Real estate: 6–12 weeks (title, valuation, local counsel)

Yachts/aircraft/art: 8–16 weeks

Realistically, the bottlenecks are KYC/source-of-wealth and security perfection in multiple jurisdictions. Front-load those.

Case studies (illustrative, anonymized)

1) Funding a UK property purchase with a Swiss Lombard line

Situation: Entrepreneur with $20m diversified portfolio in Switzerland needed £5m for a London property, preferring not to sell equities during market volatility.

Structure: Swiss private bank extended a USD Lombard line at SOFR + 1.35%, 60% LTV on equities/ETFs and 80% on bonds, blended advance rate ~65%. Borrower drew USD and swapped to GBP under a CSAsupported cross-currency swap.

Key points: 15% cash buffer parked in a pledged account; 3 business days margin cure; no rehypothecation on a designated ESG sleeve.

Outcome: Closed in 18 days. FX risk neutralized. Total all-in cost including swap ~3.7% over period; no margin calls during a 10% equity drawdown.

2) BVI SPV owning Spanish villa with rental income

Situation: Family office owned a €7m villa through a BVI SPV; required €3.5m for other investments.

Structure: Spanish bank provided a 50% LTV mortgage at Euribor + 3.0% with assignment of rental income and property insurance. Share charge over BVI SPV required, plus registration in BVI register of charges.

Key points: Withholding tax avoided via lender’s Spanish booking and EU-specific exemption; valuation updated; rental escrow for 6 months’ debt service.

Outcome: 10-week closing due to summer registry delays. Kept ownership structure intact and interest fully deductible in the SPV’s jurisdiction.

3) NAV loan against a portfolio of PE funds

Situation: Investor held LP interests in five top-tier PE funds with $50m NAV; needed $15m bridge to a co-investment.

Structure: Specialty lender offered a NAV facility at SOFR + 4.25%, 30% LTV, covenants tied to manager diversification and remaining term.

Key points: Transfer restrictions reviewed; lender comfortable with side letters; borrowing base tested quarterly.

Outcome: Executed in 9 weeks; flexible draw schedule aligned with co-investment capital calls.

4) Yacht finance with Cayman flag

Situation: 45-meter yacht valued at €25m; owner wanted €12m cash without selling markets.

Structure: Marine lender advanced 48% LTV at Euribor + 4.75%; required Cayman mortgage registration, ISM compliance, and full insurance assignment; maintenance reserve funded at 3% of hull value annually.

Key points: Borrower agreed to a minimum usage covenant and professional management to protect collateral value.

Outcome: Closed in 12 weeks; borrower later refinanced to lower spread after delivering two years of clean operational reports.

Common mistakes (and easy fixes)

Mismatch between loan and collateral currency: Borrow in the same currency as your collateral or hedge systematically. Rule of thumb: don’t exceed a 10–15% unhedged mismatch.

Overlooking withholding tax on interest: A 10–20% WHT can wipe out a good rate. Choose the paying entity and lender booking center with treaty relief.

Pledging assets with poor enforceability: Minority shares in a private company with strict transfer restrictions are hard collateral. If you must, expect lower LTV and a heavier covenant package.

Ignoring trust mechanics: Trustees need explicit powers to borrow and pledge. Obtain protector and beneficiary consents early and ensure trustee independence is maintained.

Thin liquidity buffers: A Lombard line without a cash buffer is a margin call waiting to happen. Keep 10–20% of loan amount in cash or near-cash within the collateral pool.

Letting rehypothecation run wild: It can save 25–50 bps but adds counterparty risk. Cap the percentage and exclude specific holdings.

Relying on secrecy: CRS/FATCA means positions and loans are reportable. Align tax filings with reality and keep your advisors synced.

Negotiation checklist you can copy

Eligibility schedule with haircuts by asset class and issuer concentration caps

Margin call triggers with defined cure period and hierarchy (cash top-up before asset liquidation)

Dynamic vs static haircuts (limit unilateral changes except for objective market events)

Rehypothecation cap and opt-out rights for designated securities

Events of default: remove overly broad material adverse change; limit cross-defaults to payment and financial covenants

Right to substitute collateral and release mechanics for sales/rebalancing

Reporting obligations: quarterly portfolio statements should suffice; avoid ad hoc intrusive info requests

Hedging flexibility: right to place hedges with third parties or on an unsecured basis

Transferability: lender cannot assign to competitors or hostile parties without consent

Fees: step-downs on unused commitment fees; cap third-party costs where possible

When leveraging offshore assets is a bad idea

Your investment horizon is short and volatile: If you plan near-term exits, margin calls can force poor timing.

Cash flows are uncertain: Specialty assets with unpredictable income can’t reliably service debt.

You’re using the loan to plug operational losses: Leverage amplifies both gains and losses. Fund structural problems with equity, not debt.

You’re chasing tight spreads without understanding tail risk: A 100 bps cheaper facility is meaningless if enforcement risk or WHT makes it unworkable in stress.

Practical tax pointers (get advice before you sign)

Interest deductibility: Useful only if the borrower entity or a group member can actually use the deduction. Watch earnings-stripping rules.

CFC and deemed income: If you live in a high-tax country, holding leveraged assets in a low-tax SPV may still impute income to you.

Transfer pricing: Intra-group loans must be at arm’s length. Use benchmarks and document them.

Treaty access: Check if your SPV has sufficient substance to claim treaty benefits; mailbox entities are often blocked.

Exit taxes: If collateral is sold upon default, who bears the tax? Clarify in documentation and cash flow waterfalls.

Documentation shortcuts that save weeks

Corporate approvals: Pre-sign board resolutions and shareholder consents authorizing borrowing and granting security.

Opinions: Engage counsel who regularly issues capacity and enforceability opinions in your jurisdictions. Lenders trust known names.

Valuation panel: Ask lenders upfront which valuers they accept so you don’t repeat appraisals.

Insurance alignment: Name lenders as loss payees and assign policies early; coordinate with brokers to issue compliant endorsements.

Registry slots: For land, aircraft, or ships, book registry appointments before term sheet if timing is tight.

A short FAQ

How quickly can I get a Lombard loan? If your portfolio is at the same bank and KYC is complete, 1–2 weeks is realistic. Cross-custodian setups take longer.

Can I borrow personally against assets owned by my trust? Usually via a guarantee or by having the trust/SPV be the borrower. Trustee powers and consents are essential.

Will my loan be reported to my tax authority? Yes, under CRS/FATCA most cross-border financial accounts and related loans are reported.

Can I move my portfolio manager? Yes, but lenders will want control agreements in place. Expect lower LTV and more legal work if the custodian is not the lender.

What happens in a market downturn? If LTV breaches thresholds, you’ll get a margin call. Cure with cash or eligible collateral. If you can’t cure, the lender can liquidate pledged assets.

A practical blueprint to move forward

Start with a clear, hedged plan: amount, currency, tenor, and a sober view of worst-case scenarios.

Choose lenders who know your asset class and jurisdiction: execution beats theoretical pricing.

Tighten the legal chain: ensure the borrowing entity has power to pledge and that security can be perfected cleanly.

Build cushions: liquidity buffers, flexible covenants, and reasonable cure periods.

Keep compliance clean: well-organized source-of-wealth files and CRS/FATCA alignment accelerate everything.

Borrowing against offshore assets is less about exotic structures and more about discipline. When the lender, asset, and jurisdiction are aligned—and when your risk management is honest—you can access capital at attractive terms without dismantling your portfolio or your privacy. The best deals I’ve seen are boring on paper: simple collateral, clean legal lines, conservative LTVs, and clear exit routes. Aim for that, and the leverage will serve you rather than the other way around.