I just spent a bit of time searching and reading old threads on margin loans, and couldn't find what I was looking for, so here goes.
I am looking at increasing my leverage and thus my capital with a margin loan, there are a few things I am unsure of, and actually speaking with the lenders didn't seem to be very helpful either,thus a few questions:
1. If I am using my current portfolio as security, how much can I borrow? Obviously no one here can tell me that, but in my margin loan applications I need to put down how much I would *like* to borrow, and all the lenders could tell me was that I should put down what I want and they will either approve or not approve me.
Let's say my current portfolio was worth 50k; if I used that as security would that suggest I could have a margin loan of perhaps half that? Equal that? Double that? Obviously income plays a part as well.
2. If I purchase shares with my margin loan, and then wish to sell them for a capital gain; how does that gain affect my loan? Can I take it out and do what I want with it? (Not that I would want to... what I would want to do would be to compound that with the other amount and buy shares in a different company).
3. If I were to have, say, a margin loan of 50k, and used only 25k of it; if the value of the stock I owned went down, it would have to go down significantly (ie: more than the 50% of the loan I wasn't using) before getting a margin call?
4. If the margin loan is secured against the value of my current portfolio, can I still buy and sell the shares I already owned with ease? And how would this affect my margin loan?
5. Am I only able to purchase stock with the margin loan that are on that lenders list of approved stocks? I think I read in one thread (can't find it now) where someone was saying that you can use it to purchase any stock, just that if it's one that is not on the list that you can't get extra leverage out of it... or something?
Cheers & Thanks!