A Pledged-Asset Mortgage is also called an Asset Backed or Integrated Mortgage. This special facility favors individuals with adequate financial means who can afford to meet mortgage repayment obligations comfortably; however, they might have made some financial investments that limit them from taking on other financial obligations. Lenders use Pledged Asset Mortgages in such cases, as one's financial asset base or any other investment portfolio can be considered as collateral. This is advantageous as it makes use of financial assets and yet does not require any down payment in order to receive the loan.

Asset-Based Mortgage allows borrowers to take advantage of investments that promise higher rates of return when compared to the mortgage interest rates. It is a good way to protect the expected capital gains that might have been lost if the assets were to be converted to cash. This type of mortgage can be ideal when you want to help a friend or relative secure a home loan.

When you pledge against your financial assets, a special pledge account that is maintained by the lender will be opened so that a percentage of your proposed undertaking can be transferred to it. The securities in this account still belong t
o the borrower who is allowed to make some trades, but this account has certain limitations since it is supposed to provide some percent guarantee for the mortgage. The lender usually has a say when it comes to withdrawals or transfers from the pledge account. The acceptable pledged asset portion should be 130 percent so that the account covers the required 39 percent of the loan. Borrowers face some risks; if the pledged asset percentage falls below 110 then the borrower has to make another undertaking to meet this pledge requirement. Also the lender can make a margin or collateral call to increase these levels when they are not comfortable with the securities held. However, having diversified investments might protect you from facing such lender decisions.

In general, Pledged Asset Mortgages have really made a significant contribution in the mortgage lending scene. The facility can be advantageous to those high net borrowers who fit in this category but have low credit scores, high debt ratios or a loan to value that does not look favorable. On the other hand, this kind of mortgage is also ideal for individuals with good credit records, adequate financial means, and solid investment portfolios. No matter what your situation, though, it also pays to consult financial experts so that you can make your money work best for you.