Loan Margins

19 Sep, 2009 - 1 min read

Loan margin, or otherwise margin loans, provide you with the cash to invest in shares and managed funds by keeping your shares as security for the loan.

By allowing you to invest in more shares than you could typically afford, you have the chance to gain higher returns when your portfolio rises in value. However, this also puts you at risk of bigger losses if the value of your portfolio drops.

Margin lenders will only lend a percentage of the total investment amount. This percentage is known as the loan to value ratio (LVR). So if a margin loan’s LVR is 65%, if you plan to borrow to buy $10,000 worth of shares, you would need to pay $3500, or 35% as a deposit.

Compare loan margins at RateCity to find some of the lowest rates in Australia , and maximise the profits from your share market investment.

Disclaimer

This article is over two years old, last updated on September 19, 2009. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent margin loans articles.

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