If you hold shares and want cash without selling them, two routes present themselves. Your broker will happily lend against the portfolio through a margin account. Or you can arrange a dedicated facility secured on the shares.
Both produce the same immediate outcome — money in your account, shares still yours. They behave very differently the moment markets move against you, and that difference is the whole basis for choosing between them.
The Structural Difference
A margin account is a revolving credit line attached to your brokerage account. There is no fixed term. Interest floats. The broker can adjust margin requirements, and in most agreements can do so at their discretion and with limited notice. Crucially, the broker holds the shares already and can generally liquidate them without going to court and often without much warning.
A stock loan is a standalone facility for a defined term, arranged with a specific lender, against a specific pledged holding. The shares are transferred to a regulated third-party custodian for the duration. Terms are fixed at the outset rather than adjustable at the lender’s discretion. Our stock loans pillar sets out how these are structured.
Where Each One Wins
Margin accounts are better for:
Short-term, tactical borrowing. If you need money for a few weeks and expect to repay quickly, the convenience is hard to beat — the facility already exists and drawing on it takes minutes.
Smaller sums against a diversified portfolio. Brokers are comfortable lending against a spread of liquid large-cap holdings.
Active traders who are borrowing as part of an investment strategy rather than to fund something outside the portfolio.
Stock loans are better for:
Larger sums. Broker margin has practical ceilings; standalone facilities are arranged into the tens of millions where the collateral supports it.
Concentrated positions. This is the big one. Brokers apply severe haircuts to concentrated single-stock holdings, and some will not lend against them meaningfully at all. Specialist lenders will.
Defined-term certainty. If you are funding something with a fixed timeline — a property purchase, a tax bill, a business acquisition — a facility that cannot be repriced or called at the lender’s discretion is worth paying for.
Restricted, unlisted or unusual stock, which brokers typically will not accept.
Anyone who wants to cap downside exposure. Non-recourse structures limit liability to the pledged shares, which no margin account offers — the trade-offs are set out on our recourse and non-recourse page.
The Difference That Actually Matters
In a rising or flat market, the two are broadly interchangeable and the margin account is usually cheaper.
In a falling market they diverge sharply, and this is where people get hurt.
A broker facing a rapid decline can raise margin requirements across the board, demand immediate top-up, and liquidate positions to protect itself. It can do this at the worst possible moment — precisely when your shares are cheap and precisely when everyone else is being liquidated too. The forced selling is not personal; it is automatic.
A term facility with fixed covenants does not behave that way. The terms agreed at the outset are the terms that apply. There may still be a coverage ratio and a top-up obligation, but it is defined in advance rather than adjustable at the lender’s discretion mid-crisis.
If your borrowing exists to fund something you genuinely need, having that funding withdrawn during a market dislocation is the risk worth paying to avoid.
Cost
Margin borrowing usually carries a lower headline rate, and there are no arrangement fees or legal costs. That is a real advantage and should not be dismissed.
A stock loan carries an arrangement fee, legal costs, and generally a higher rate. What you are buying is term certainty, a higher advance against concentrated stock, and in some structures a cap on your downside.
Whether that premium is worth paying is a question about the money’s purpose. Borrowing to trade — margin is usually the efficient choice. Borrowing to complete a property purchase in six weeks — the certainty is worth considerably more than the rate difference.
Private Bank Lombard Facilities
There is a third option worth mentioning. Private banks offer Lombard lending against portfolios held with them, which sits between the two: more structured than margin, usually cheaper than a specialist stock loan, but requiring an existing banking relationship and typically a diversified portfolio rather than a concentrated position. Our Lombard loans page covers these.
For diversified portfolios generally, our borrowing against an investment portfolio page sets out the options.
Frequently Asked Questions
Can I have both at the same time?
Yes, though the same shares cannot secure both. Some clients run a margin account for tactical borrowing and a separate term facility against a specific holding for a specific purpose.
Which gives a higher loan-to-value?
It depends entirely on the collateral. Against a diversified portfolio of liquid large-caps, margin is often competitive. Against a concentrated single-stock position, a specialist lender will typically advance considerably more than a broker will.
Is a stock loan slower to arrange?
Yes. A margin facility is effectively instant if the account exists; a term facility takes days for listed stock and longer for anything unusual. If speed is the only consideration, margin wins.
What happens at the end of a stock loan term?
It is repaid — from a sale, a refinance, or other liquidity. Some facilities can be extended by agreement, but that is negotiated rather than automatic, so the exit should be planned from the outset rather than assumed.
The choice usually comes down to what the money is for and how much certainty you need around it. You can see the full range of securities-backed facilities we arrange on our homepage and our securities-backed lending page, or contact our team to talk through a holding.