Frequently asked questions about Lombard loans
Lombard Credit helps you calculate how much financing we could get you with your assets. Get the most out of your savings. It’s easy, you get twice as much out of your assets:
- You do NOT sell your assets and they continue to generate.
- You use them as collateral leaving other assets free.
- In addition, by not mortgaging you save the stamp tax.
Lombard Loan Lombard Loans
* Amounts in Euros. The calculation is only an approximation. The maximum amount of financing and the interest rate may be different for each client depending on their particular situation.
You have the questions. We provide the answers.
What is a Lombard loan? A Lombard loan is a loan obtained using financial assets, such as shares or investment funds, as collateral. In this way, liquidity can be accessed without having to sell or divest the assets, taking advantage of the leverage effect.
Advantages of a Lombardo loan
What are the risks of a Lombard loan?
Fall in the value of assets
If the value of financial assets falls below a certain level, the lender may require the customer to provide more collateral or to amortize part of the loan, which may involve an additional disbursement.
Failure to pay installments
If the customer defaults on loan installments, the lender may foreclose on the collateral and sell the financial assets to recover the borrowed money, which may result in a loss of principal for the customer.
What are the requirements to apply for a Lombard loan?
1. Be of legal age and have legal capacity to contract.
2. Prove the ownership and origin of the financial assets, as well as the client’s tax and equity situation.
3. Have sufficient and adequate financial assets to offer as collateral. These assets must be deposited in an authorized financial institution and be susceptible to valuation and liquidation.
4. Comply with the solvency and risk criteria established by the lender, as well as with the rules for the prevention of money laundering and the financing of terrorism.
What type of financial assets can be used as collateral?
Shares
Shares of companies listed on national or international stock exchanges
Funds
Equity, fixed income, mixed or guaranteed, indexed investment funds, provided they are marketed by authorized financial institutions.
Other Assets
Other financial assets that the lender accepts, such as bonds, debentures, bills, promissory notes, certificates of deposit, etc.
What are the taxes on a Lombard loan?
The taxation of a Lombard loan depends on the legislation in force at any given time and in any given territory, as well as on the customer’s tax and asset situation. In general, the following aspects can be taken into account:
Tax rate between 0.5% and 1.5%.
The loan is NOT subject to the Tax on Property Transfer and Documented Legal Acts (ITPAJD), which is paid when formalizing the operation as in the case of the hypothecary loans. The tax rate varies according to the autonomous community, but it is usually between 0.5% and 1.5% on the amount of the loan.
Other tax considerations
The sale or transfer of the financial assets as collateral does not generate a capital gain or loss for personal income tax or corporate income tax purposes, since the ownership or value of the assets is not altered. However, if the lender executes the guarantee and sells the assets to recover the money lent, a capital gain or loss is generated, which is calculated by the difference between the acquisition value and the transfer value of the assets.
Interest deductible in Personal Income Tax (IRPF)
Loan interest is deductible in Personal Income Tax (IRPF) or Corporate Income Tax (IS), as the case may be, provided that the loan is used for an economic activity or investment.
What are the fees for a Lombard loan?
The fees for a Lombard loan depend on the terms and conditions agreed between the client and the lender, as well as the costs associated with the transaction. We will advise you all along the way. In general, the following fees may be charged:
Origination fee
This is the percentage that is charged on the amount of the loan when the transaction is formalized. It is usually between 0.5% and 2%, depending on the lender.
Cancellation fee
This is the percentage charged for paying off the loan before maturity. It is usually between 0.5% and 2%.
Custody commission
This is the percentage charged for holding financial assets on deposit as collateral. It is usually between 0.1% and 0.5% per annum, this depends largely on the lender.
Brokerage commission
This is the percentage charged for managing the search and contracting of the loan with the lender. In the case of lombardos.es, this commission is free, since it is only charged to the lender and not to the client.
What are the requirements to apply for a Lombard loan?
Age of majority
Be of legal age and have legal capacity to contract.
Assets available
Have sufficient and adequate financial assets to offer as collateral. These assets must be deposited in an authorized financial institution and be susceptible to valuation and liquidation.
Proof of ownership of assets
Proof of ownership and origin of financial assets, as well as the client’s tax and equity situation.
Solvency and risk criteria
Comply with the solvency and risk criteria established by the lender, as well as with the rules for the prevention of money laundering and the financing of terrorism.
What types of financial assets can be used as collateral in a Lombard loan?
Shares
Shares of companies listed on national or international stock exchanges
Investment funds
Equity, fixed income, mixed or guaranteed, indexed investment funds, provided they are marketed by authorized financial institutions.
Other assets
Other financial assets accepted by the lender, such as bonds, debentures, bills, promissory notes, certificates of deposit, etc.
Documentation, deadlines and other issues to consider for a Lombard loan
What percentage of financing can be obtained with a Lombard loan? The percentage of financing that can be obtained with a Lombard loan depends on the value, volatility and quality of the financial assets offered as collateral, as well as market and lender conditions. In general, a financing ratio ranging from 50% to 80% of the value of the assets is usually applied, although it may vary from case to case.
Does Plazo have a Lombard loan? The term of a Lombard loan can be tailored to the client’s needs, as long as it does not exceed the maximum term set by the lender. In general, terms ranging from 6 months to 10 years are usually offered, although they can be shorter or longer depending on the case.
What documentation is needed to apply for a Lombard loan? The documentation required to apply for a Lombard loan depends on the lender’s requirements, as well as on the client’s profile and situation. In general, the following documents are usually requested:
- DNI or NIE of the applicant and of the guarantors, if any.
- Certificate of title and valuation of the financial assets offered as collateral.
- Bank statement of the last few months showing the movements and balance of the accounts of the applicant and the guarantors, if any.
- Income tax return or corporate tax return for the last fiscal year, as the case may be.
- Proof of income or economic activity of the applicant and guarantors, if any, such as pay slips, pensions, invoices, etc.
- Other documents as deemed appropriate by the lender on a case-by-case basis.
What is the interest rate on a Lombard loan? The interest rate on a Lombard loan is determined on the basis of the risk and profitability of the transaction, as well as market and lender conditions. In general, a variable interest rate is usually applied, which is reviewed periodically, although it can also be fixed or mixed depending on the case. The interest rate is usually lower than other financing options, as the lender has a solid guarantee.
