Margin loan rates determine the amount that you will need to repay on your borrowing amount throughout the term of your loan. The lower the rate, the cheaper your repayments, which is why it’s crucial to compare margin loan rates to find the lowest one for you.
To give yourself a healthy gap, you should budget to be able to afford at least a 2 percent rise in your margin loan rate. This will protect you against sudden changes in interest rates, which could greatly increase your repayments if your loan amount is large.
Because some borrowers only choose to hold their investments for a short period, there is often the option of paying interest only on your margin loan, which means that you can significantly reduce the amount of your repayments, but never repay any principal.
Margin loan rates can also refer to the loan to value ratio (LVR), which dictates the amount of your initial deposit. So for example, an LVR of 75%, on a $10,000 investment will need a 25% deposit, which is $2500.
Compare margin loan rates for the most affordable investment options in Australia, here at RateCity.