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Margin Loans - who do you use and why?

Discussion in 'Stock Market Nuts and Bolts' started by Pager, Jun 4, 2007.

  1. Pager

    Pager

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    Posted a similar thread on reef but thought may be useful for many others to get a run down on who provides the best margin loan facilities, im looking for one so not least me :).

    Who do you use and why? any bad experiences, hidden charges/fees, tied to using certain brokers or not available to use with online brokers etc.

    What interest rate does your provider charge?

    If you pre pay your interest how much rate reduction do you get.

    Cheers

    Pager
     
  2. tech/a

    tech/a No Ordinary Duck

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    Re: Margin Loans, who do you use and why ?

    I think I may have answered you on Reefcap.

    I use BT.
    Rate is 7.75 currently.
    I dont really pay much attention to rates.

    Interest is charged only when you use it.
    So if you had $20000 in your account and had only $20000 of positions open you would not be using margin.

    You can use any broker.
    They have a good Margin List.
    They have a very good serive department and if I Want a statement its here in a fax within 10 mins.

    Remember if you get called you dont have to place more money in your account---you can but you can sell SOME stock to lighten your exposure.
     
  3. silence

    silence Toot Toot!

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    I have a question that doesn't quite need a new thread.

    I am going to be applying for a commsec margin loan as soon as I get the first payslip from my new job.


    Ignoring what it may say on the forms, what sort of income will they *really* be looking for?


    When I got my commonwealth credit card, they gave me an $8000 limit on a $12000pa income because I had an ebay business, shares, hardly any expenses, etc. So they thought something of me then.

    But am I likely to be approved for a margin loan with approx $25000pa income from my job? A decent amount of shares may sway their decision but if I have to apply for a $20000 minimum limit...
     
  4. Pager

    Pager

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    Thanks Tech, that is a great rate you get :), when I spoke with BT if you pre pay 12 months interest there current rate is 8.65%, normal rate is 9.15%.




    Silence

    If you already own enough shares that are on there Margin list and so have security and pre pay your interest for 12 months don’t think Comsec will worry to much if you have only just started work and aren’t earning a lot, they incidentally have a special for new clients who pre pay for 12 months of 8.25%, minimum loan is $20K, good luck.

    Surprised there are very few replies, either posters here don’t have or use margin loans or the topic is covered elsewhere and ive missed it?

    Once I have finished my search will post who I found the best, maybe of use to others.

    Cheers

    Pager.
     
  5. Knobby22

    Knobby22 Mmmmmm 2nd breakfast

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    I use Comsec margin loan.
    Provided you don't sail too close to the margin, they are fantastic.
    Gearing is necessary in a boom market.
     
  6. silence

    silence Toot Toot!

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    If you overpay your interest do they let you claim the extra back?
     
  7. yonnie

    yonnie

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    I hear Macquarie pre-pay is 7.75%

    have no experience with them:cool:
     
  8. Pager

    Pager

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    Well I have phoned around quite a few providers and to be honest they are all much of a muchness, what i have found is they are ALL negotiable with Interest rates if pre paying and particularly if your loan is a decent size ($100K+), so if your after a Margin loan make sure you "haggle" :D.

    Rates do vary on fist glance for pre pay most quote from 8.9% down to 8.25%, Macquarie are offering 7.75% for there new prime account but this is not strictly a Margin Loan although very similar, also it does not have a facility for Options which most providers know allow all be it Call options, basically for selling covered calls.

    Cheers

    Pager
     
  9. Temjin

    Temjin

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    I use St George Margin Lending for my Wealthtrac Wrap Portfolio through 2020DirectInvest.com.au as the adviser. They recently lowered their rates to 8.4% for 12 months prepaid advance. No minimum loan, no loan establishment fee.
     
  10. Love Zn

    Love Zn Becoming anaemic, need Iron.

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    Have a look a June 07 Money Mag, it has Bank of the Year (awards)

    St George was picked winner (not cheapest rate) and Macquarie and Westpac as finalists for Margin Lender.
     
  11. ottg

    ottg

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    This is a very old thread but I really need advice on:

    a. Which brokers in Perth can help me obtaining margin loans.

    My current broker may only deal in property investment loans due to their license restrictions.

    b. Which banks do you use? What rates did you negotiate over what period?

    c. Were the LVR according to their recommended list?

    d. Did the bank restrict you to ASX200 shares only do they allow SP500 shares as well?

    Thx
     
  12. ottg

    ottg

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    Sorry to bump this thread but I really need your experiences on this.

    After my inquiries I found that many of the SMSF service providers do not allow margin loans but only loans for property.

    a. Any suggestions for SMSF service provider that allows margin loans?
    b. Suggestions for banks that provides margin loans subject to (a)?
    c. Stock purchasing platform however I do not foresee more than 10 trades a year.
     
  13. TPI

    TPI

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    NAB Super Lever I think it's called, has it's limitations though.

    I stick to margin loans outside super only, which have greater flexibility.
     
  14. Junior

    Junior

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    Only certain types of gearing are allowed through an SMSF. You cannot use a margin loan.

    You can purchase instalment warrants or you can establish a LRBA (limited recourse borrowing arrangement) - usually used to purchase direct property.
     
  15. TPI

    TPI

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    NAB Super Lever is a LRBA product for shares I believe.
     
  16. Junior

    Junior

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    Interesting...I wasn't aware of that product. I always assumed the compliance burden and complexity of requiring a separate LRBA for each stock would be prohibitive.
     
  17. PinguPingu

    PinguPingu

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    I thought about using Commsec, as that would mean at least I have instant transfer between by netbank saver and CDIA, brokerage is ok at the usual aussie rip off of 19.95 a trade under 10k and the rates are somewhere in the middle off whats offered, around 7.67% I think, might be a touch lower now. YET, for every goddamn transaction, on top of the $20 already, they'll charge a $10 'transaction' fee for every trade settled using the margin loan. :banghead::mad:


    The other option is Bell Direct's dodgy as hell 'direct cash account' which isn't even a bank account, but at least there are no bullsh*t fees, its $15 per trade and the rate is 7.55%, of course their 'cash account' pays you a pittance of interest.


    In the US, they are almost approaching zero brokerage these days :(
     
  18. TPI

    TPI

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    With some negotiating you can get margin loan variable interest rates below 5.5%, depending on the size of the loan.
     
  19. ottg

    ottg

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    Thank you for all the pointers so far. I will follow up on them.

    Can you be a bit more specific wrt to which banks are prepared to negotiate from your experiences.

    Loan size around $250k and LVR 60% - some banks cap their loans at $250k.

    Do you know of banks which have uncapped share investment loans?
     
  20. PinguPingu

    PinguPingu

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    My loan will probably only be in the range of 30-40,000. I know Westpac has variable interest rates at 5.49% for ASX100 stocks only. I am thinking of just going with them and only gearing the large cap trades.

    TBH, it's all these BS fees and insane commissions that really bug me. I mean c'mon Commsec. A 10$ transaction fee means effectively $60 round trip brokerage for under $10k trades. Complete rip-off.

    I would so go with Bell Direct if their cash account was actually a bank account.
     
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