For Australians looking to borrow money without selling valuable investments or property, pledged assets can offer a flexible solution. As lending criteria and investment strategies evolve in 2025, understanding how pledged assets work—and how to use them safely—can open new doors to financial opportunity.
What is a Pledged Asset?
A pledged asset is any property or investment that a borrower offers as security to a lender. Commonly, this means shares, managed funds, or even term deposits are held as collateral to secure a loan. If the borrower defaults, the lender has the right to claim the asset to recover the debt.
Unlike traditional secured loans (such as a mortgage over a house or a car loan over a vehicle), pledged asset lending allows you to access finance while retaining ownership of your investments. This approach is particularly attractive for investors seeking liquidity without triggering a capital gains event or missing out on future growth.
How Pledged Asset Lending Works in 2025
Australian lenders—including major banks and specialist providers—have expanded their pledged asset loan offerings in 2025 to reflect changing investor needs and regulatory settings. Here’s what’s changed and what to consider:
- Asset Types: In 2025, accepted pledged assets include ASX-listed shares, managed funds, government bonds, and select term deposits. Some lenders now also accept ESG-compliant and green investments as collateral.
- Loan-to-Value Ratios (LVR): LVRs vary, but most lenders will advance between 50% and 80% of the asset’s market value. Blue-chip shares and government bonds attract higher LVRs; riskier assets or those with lower liquidity may have stricter limits.
- Interest Rates: Pledged asset loans typically feature lower interest rates than unsecured personal loans, but rates are subject to the lender’s risk assessment and the volatility of the pledged asset.
- Margin Calls: If the value of your pledged asset drops below a certain threshold (the maintenance margin), you’ll need to top up with cash or additional assets, or the lender may sell your investments to cover the shortfall.
For example, suppose you own $200,000 in ASX 200 shares. By pledging this portfolio, you could access up to $140,000 (at a 70% LVR) for a home deposit, business funding, or other needs—without selling the shares or disrupting your investment plan.
Benefits and Risks of Pledging Assets
Benefits:
- Liquidity Without Selling: Access funds while maintaining exposure to market growth and dividends.
- Tax Efficiency: Avoid triggering capital gains tax events from selling investments.
- Flexible Use of Funds: Borrow for any purpose, including property investment, business expansion, or family needs.
- Potentially Lower Interest: Secured nature of the loan can mean lower rates than unsecured options.
Risks:
- Market Volatility: Falling asset values can lead to margin calls and forced sales, potentially at a loss.
- Borrowing Costs: Interest costs add up, especially if the loan is not repaid quickly.
- Complexity: Pledged asset arrangements can be complicated, with detailed loan and asset monitoring requirements.
In 2025, the Australian Securities and Investments Commission (ASIC) continues to warn consumers about over-leveraging and the risks of margin lending, especially with volatile or concentrated portfolios. Responsible lending reforms have also prompted lenders to tighten their assessment processes, ensuring borrowers understand the risks and have adequate buffers in place.
Who Should Consider a Pledged Asset Loan?
Pledged asset lending can suit:
- Investors with substantial, diversified portfolios who need liquidity without disrupting long-term plans
- Borrowers seeking to avoid capital gains tax from selling appreciated investments
- Parents helping children into the property market—some banks allow parents to pledge investments as security for their child’s home loan
- Business owners looking to fund expansion using existing assets
However, this strategy is not for everyone. If your portfolio is highly concentrated or volatile, or if you’re uncomfortable with the risk of forced sales, a pledged asset loan may not be suitable. In 2025, lenders are also more likely to reject applications where repayment ability or asset diversity is insufficient.
Recent Policy and Regulatory Developments
Key 2025 updates include:
- ASIC Margin Lending Review: ASIC’s 2024–25 review has led to stricter disclosure and suitability requirements for margin and pledged asset loans, including stress-testing borrower capacity for margin calls.
- Climate-Related Asset Acceptance: Some lenders now favour assets with strong ESG credentials, in line with APRA’s sustainable finance guidelines.
- Increased Digital Integration: Digital platforms now enable real-time asset monitoring and margin alerts, improving transparency for borrowers.
These changes reflect a broader shift toward responsible, tech-enabled lending in Australia’s evolving financial landscape.
