Mortgage where you pledge shares as additional collateral?

Californication

Hi

Does anyone know if there's a mortgage product where in addition to the house, you can also pledge additional assets (shares, gilts, etc) to get a better rate on the mortgage?

The scenario I'm thinking is something like:

10% deposit
90% mortgage

but then pledge shares worth 30% of the house as well. If the lender applied a 50% haircut to the shares, it would still be equivalent to 15% of the house price, so you should be able to get the rate available to someone putting down a 25% cash deposit?

The problem I'm trying to solve is getting a cheap mortgage without selling shares to fund a bigger deposit.

Hope that all makes sense!

Thanks
-Cali

Joe_Bloggs

Many of the remaining lenders have had their fingers burnt in dabbling with speculation. Perhaps allowing cash ISAs to offset mortgage interest would be a mutually beneficial arrangement that is less of a risk than shares alone.
J_B.

Californication

Joe_Bloggs wrote: »

Many of the remaining lenders have had their fingers burnt in dabbling with speculation. Perhaps allowing cash ISAs to offset mortgage interest would be a mutually beneficial arrangement that is less of a risk than shares alone.
J_B.

There's a good argument for people to keep money in the cash ISA rather than paying down the mortgage, since in some cases the tax break is worth more in the long run than the cost of the higher mortgage in the short run.

I included a hair cut of 50% on the share values in my original example, to reduce the market risk on the shares held as collateral by the bank. Even a higher hair cut could be used, if that was the only problem.

I'm fairly sure that private banks will provide the service that I'm describing, but I doubt that they'd be interested in me as a client (at least not without adding on so many charges that it's no longer worth my while...)

--Cali