What is the credit limit and how you can manage it?

At the time you complete an application form, you request a credit limit. Every applicant is assessed for this credit limit, based on their financial position. The credit limit is the maximum that your loan can reach, regardless of your borrowing limit1.

Please note that all applications are subject to our approval. BT Margin Lending is committed to responsible lending practices and conducts a comprehensive credit assessment process which includes credit reference agency checking and affordability verification. To enable us to do this, you are asked to provide appropriate supporting financial information, which is detailed in the loan application form. The credit limit that we approve may be lower than the credit limit you request. As a responsible lender, we will only approve a credit limit which we consider is affordable to you after consideration and verification of your financial circumstances.

After approval, your credit limit will be visible on your monthly statement, and when you log into your account.

How you can manage your credit limit

It is your responsibility to monitor your account so that your loan balance operates within the approved credit limit at all times.

To help you manage your margin loan within your credit limit, we will provide a service of early warnings to help you avoid a breach. This includes a letter or email if your loan balance reaches 80% of your credit limit, and a phone call if your loan balance reaches 95%.

If you think your loan balance is likely to exceed your credit limit, you can prevent this by making a payment or selling securities to reduce your loan balance. Alternatively, you may like to apply for a credit limit increase, by completing the Credit Limit Assessment Form.

If your loan balance exceeds the credit limit

If your loan balance reaches your credit limit, you will no longer be able to draw down on your loan. Your available funds at this point in time will be zero. This means that you can no longer trade, draw-down, get a cash advance and/or take part in any stock offerings such as IPOs, using your margin loan.

If for what ever reason your loan balance exceeds the credit limit, we are required by legislation to perform a credit assessment. To do this, you will be asked to complete a Credit Limit Assessment Form and provide supporting financial documentation.

Do you capitalise interest?

You are not permitted to capitalise interest above your credit limit. You will then need to pay interest as it falls due. Failure to do so will be a default under your facility terms and conditions and we may exercise our rights and sell securities to bring your loan balance back within 90% of your credit limit.

To prevent this from happening, you can either make alternate arrangements to meet your interest payments or reduce your loan balance to a level that provides sufficient capacity for future interest capitalisation.

1Your borrowing limit is the maximum your loan balance can reach based on the securities in your portfolio. It is calculated by multiplying each investment’s market value by its LVR. The borrowing limit will fluctuate based on changes in the market value and LVR.