Margin Loans Cheap Margin Loans - opinions

Dear one and all,

I am looking to take out a Margin Loan to slowly and conservatively leverage into a Peter Thornhill LIC type strategy.

I currently rent and do not own property (long story...).

So, I am starting to look around to set up a facility that will allow me to borrow and buy some good quality shares.

In terms of Margin lending interest rates:-
Bell Potter = ~7%
CBA =~ 6.63%
NAB ~ 6.45% (<250k) down to 5.70% for > $250k
Interactive Brokers ~ 3.75%. But I'm still trying to understand how their calculations work...

Would any of you:-
1) Know of other institutions with competitive interest rate on Margin Loans? and/or
2) Is there some other way to get my hot little hands on some loot via a loan whilst I don't own property?

Thanks
Nick

 

Westpac - 5.2%

 

Special rate of 4.95% p.a. over at NAB

NAB Equity Builder

 

Another possible option..

Interest rate schedule - Leveraged

They have a cheap margin loan option for DIY investors. 4.65% 1 year fixed paid monthly. Variable rate is 5.5% currently.

Be, very, very careful playing with Margin. Definitely consider seeking expert advice from people, pay attention if they tell you what you may not want to hear.

I've been noticing multiple postings from people in the forum (not just yourself) seeking margin. That NAB Equitybuilder thread has got a few people openly admitting to using the product for double gearing... if the lenders notice that and identify the individuals they could well pull their facilities as frankly it will be straight breach of the lenders internal compliance policies. This increasing optimisim around margin is probably a good indicator of where we are at in the cycle.

Please dont take this as me saying I think your doing anything irresponsible.. I'm not, just providing a reminder to tread down this path with real caution.

 

I understand your sentiments there @Goodison.

As well, although there were other factors at work, if people are interested in what can happen with double gearing it's not a bad start to read the Ripolli Report "Parliamentary Joint Committee on Corporations and Financial Services":

Completed inquiries 2008-10 – Parliament of Australia

The submissions to the Inquiry make for interesting bed-time reading

Submissions received by the Committee as at 26 October 2009 – Parliament of Australia

 

Meaning?