Portfolio-Backed Loan — Three Repayment Strategies
$2M investment portfolio pledged as collateral. $1M loan (50% LTV) used to purchase property. Portfolio remains fully invested throughout — its growth is the engine that services and repays the loan. Compare three strategies below, and see how each compares to a standard $1M mortgage at 5%.
Investment portfolio
$2,000,000
Pledged as collateral — stays fully invested
Loan (50% LTV)
$1,000,000
Proceeds used to purchase property
Annual interest (at 2%)
$20,000
Paid from portfolio returns
Portfolio growth (at 7%)
$140,000
Annual return — the repayment engine
Net after interest
$120,000
Available for reinvestment or repayment
Mortgage benchmark
$64,419
$1M at 5%, 30 years — annual payment