Direct Margin Loan

What is a margin loan?

A margin loan is a way for you to borrow to invest (or gear) so you can increase your participation in the sharemarket. This wealth creation strategy has the potential to help you own a more diversified portfolio and may have tax advantages for certain investors. Of course with margin lending there is an element of risk due to the potential for loss.
Is there a minimum balance?

No, there is no minimum balance for a Direct Margin Loan.
What is the gearing ratio or LVR?

The gearing ratio or loan to value ratio (LVR) is the percentage we apply to the value of each holding to calculate the geared value.
What is the geared value?

The geared value is the amount we are willing to lend against your portfolio. It is calculated by applying the gearing ratio to the market value of each holding in the portfolio.
Are my interest payments tax-deductible?

Certain individuals can claim the interest paid on their margin loan against their taxable income. Please seek professional advice.
What is a margin call?

If your loan exceeds the geared value plus the buffer, we may require you to take immediate action. We are not obliged to contact you if you are in margin call.
What happens if I go into margin call?

If your account falls into margin call, you have the option of providing us with additional security or selling down part of your existing holding (sufficient to meet the margin call) or paying cash the amount of the margin call.
What steps can I take to prevent margin call?

Keeping the gearing to a moderate level can reduce the likelihood of being margin called. Additionally, a well diversified portfolio can help spread the risk against a sharp fall in value in one or two different stocks.
What are the setup costs of a margin loan?

For an individual, there are no setup costs. For a company, the establishment fee is a minimum of .
Can I prepay my interest?

Yes, you can elect to prepay your interest.
What is the buffer?

10% of the geared value. The buffer ensures that small fluctuations in prices will not trigger a margin call.
What are available funds?

Often called surplus, it is the amount by which the geared value exceed the loan.
How do I calculate my equity?

Equity is calculated as total market value of holdings less total loans.
What is the margin ratio?

The margin ratio is calculated as the loan divided by the geared value. Where the margin ratio exceeds 100%, the loan is in buffer. Where the margin ratio exceeds 110%, the loan is in margin call.
What Minor account types be set up with a Direct Margin Loan?

Minors cannot directly be the borrower or guarantor as they cannot enter into a contract. However, they can be the beneficiary of a trust where the trustee executes the documents.
Is a Director’s guarantee required for Company accounts?

Yes, at least one of the directors must provide a guarantee.
Is there a fee for Trusts accounts?

A separate fee is not charged for reviewing trust deeds.
How often is the Approved Security List updated?

The Approved Security List can be changed daily to reflect new issues, code changes, changes in LVR etc.

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