Hi all, I am seeking some advice in regards to marginal lending. I am hoping to borrow 60-80% LVR (if that is the correct term) to invest in shares (most likely bank shares). Based on current lending and the amount of debt I have vs income (wife on maternity leave, and loss of one of my income streams due to Covid), I am unable to even re-finance property port folio at this point in time. Will this be a hurdle for marginal lending? I also have more cash than I would be willing to borrow, can that act as some sort of security? What else do the banks consider for this investment? TIA
Honestly did not understand anything in this post. are you borrowing against property or against shares (margin lending)? if you cant refi property due to lower income, what is the point of the question? 60%-80% lvr of what? Can cash be used to secure a loan? Usually no.
Margin lending in the current volatile climate wouldnt want to be muh above 30 to 50 % of the share portfolio value, unless one has considerable cash buffer to limit margin calls, otherwise one sells shares at a point when its not great to do so To see how Margin lending should NOT be applied, google Storm Financial GFC. In our planning biz, even for risk tolerant clients that want to go go go, 30 % is the max, unless we have good cash reserves to top up ta rolf
Be very very careful in this environment. With the volatility around you could very quickly be whipsawed into a margin call and lose your cash (which you should keep in case of a call in any case) otherwise you will have your shares sold on you. I have been watching the banks. They are moving around alot.
Margin like any other lending needs to be serviced, Soto answer your question the change in income status will play a part to some degree. You would find out pretty quickly by just asking your broker/bank. One of the guys in our little investing group got denied the NAB equity builder two weeks ago due to servicing. My opinion only
My view: And if you have sufficient cash to cover a margin call how geared are you in reality and then need to ask the question Why bother against the potential risk? Personally no way on this earth would I be prepared to lose that cash and still be in a position of owing money to someone else. But it's up to the person.
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