What is margin lending?
Margin lending is a type of loan that allows you to borrow money to invest, by using your existing shares, managed funds and/or cash as security. It is a type of gearing, which is borrowing money to invest.
How does margin lending work?
The amount you can borrow is based on your financial position as well as the allowable Loan to Value Ratio (LVR) of your existing portfolio, being your shares, managed funds or cash used as security. The LVR is the amount of your loan divided by the value of the shares or managed funds being used as security.
If the value of your security drops in relation to the loan amount, you may exceed the maximum LVR. This will trigger a ‘margin call’ and you’ll be required to either reduce your loan…
