Margin lending at a glance

You can use your existing cash, shares or managed funds as security for a margin loan. It's similar to taking out a mortgage. You supply the asset as security and the lender loans you the money. A lending ratio known as the loan-to-valuation ratio or LVR applies to each security, and this determines how much you can borrow.

With a margin loan, there is no set loan limit. The value of your securities determines the limit of your loan. This is calculated daily. If you invest more, or if you add securities to your portfolio, your loan limit increases automatically.

Provided you meet your loan obligations, you are able to borrow more from your margin loan facility - unlocking the multiplier effect.

Provided your loan balance remains within a set loan threshold, you are not required to make any repayments on your loan.

However, if your loan balance falls below a set threshold, called a buffer, you will be required to pay back part or all of your loan. The request to repay part or the whole of a loan is called a margin call.

Check out the details of how a margin buffer and margin call work.

Loan providers offer flexible payment arrangements that include prepayment and discounting. Provided you meet your loan conditions, you can pay as much or as little interest as you like. Unpaid interest is simply added to your loan.

Interest options differ from provider to provider. Check out the interest arrangements offered by BT Margin Lending.