# Margin Lending Questions



## vandalic79 (26 June 2007)

For those who have a margin loan do any of you have your margin loan with a bank other than the bank (or their linked partners) you have your online broking account with?

I use Westpac Broking for my share investing and want to stay with them, they provider their margin loans through BT Financials, though I can get better margin loans through other providers in terms of options and less interest. However, nobody else links directly with Westpac so I wouldn't see the margin loan within my online broking account.

So the main question - how much of a hassle is it to have a margin loan with one provider and then buy shares using that margin loan with another bank's online broking services? Is it possible? If so, how do you pay into your online broking account?

Should I just stick with BT? I see in a few other threads a lot of you use them.

Looking forward to your feedback.


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## tech/a (27 June 2007)

*Re: Margin Lending Question*

I use a full service broker.
They run it through an E/Trade account linked to the BT Margin loan.
Not the most efficient I know but it can be done.


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## Bomba (28 June 2007)

*Re: Margin Lending Question*

i use commsec and have the CBA direct investment account linked to it


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## intheblack (20 November 2007)

*Margin lending question*

Is there any logic in taking on a margin loan if I am not fully invested in shares currently?  (i.e. should I invest all my cash first, and only then use borrowed money?)

Thanks.


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## Tysonboss1 (20 November 2007)

*Re: Margin lending question*



intheblack said:


> Is there any logic in taking on a margin loan if I am not fully invested in shares currently?  (i.e. should I invest all my cash first, and only then use borrowed money?)
> 
> Thanks.




It really depends on what you stratergy is going to be,..

with some stocks they will let you borrow up to 70% of the stocks value,

so you can by $1000 worth of shares for every $300 cash or equity you have,


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## Sean K (20 November 2007)

*Re: Margin lending question*



intheblack said:


> Is there any logic in taking on a margin loan if I am not fully invested in shares currently?  (i.e. should I invest all my cash first, and only then use borrowed money?)
> 
> Thanks.



I only keep cash, or go back to more cash, when I think the market's looking extremely vulnerable, like the past year. (US housing/credit issues) I also have 'cash' sitting in my IG account for day trading. Remember, you can use the excess equity/cash in your margin loan as you like for other 'investments', but you need to keep a good account of it. If you take excess equity out for any other reason the interest is not (supposed to be) tax deductable. In answer to your question, you also need to look at the interest you get on the cash compared to what you pay on the ML. Cash you may get 5%, while you will pay 8% ish on the ML, so you should be investing cash first. 

(note: I am not licensed to provide any advice about anything in particular, except scuba diving)


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## intheblack (20 November 2007)

*Re: Margin lending question*



kennas said:


> Cash you may get 5%, while you will pay 8% ish on the ML, so you should be investing cash first.




That makes sense.  Many thanks


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## tech/a (20 November 2007)

*Re: Margin lending question*

Lets say you have $50k

Your only trading say $30,000 of it.
Having a margin loan facility while in cash *will not mean you pay any interest*.

Then if you see an opportunity you can purchase the leverage.


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## bigt (20 November 2007)

*Re: Margin lending question*

..so to clarify...if you have a margin loan facility (i.e. have been approved etc)...you dont pay interest unless you utilise the margin loan to purchase assets? Makes sense.


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## Sean K (20 November 2007)

*Re: Margin lending question*



bigt said:


> ..so to clarify...if you have a margin loan facility (i.e. have been approved etc)...you dont pay interest unless you utilise the margin loan to purchase assets? Makes sense.



Yes, of course. Plus you can buy shares not 'margin lending approved' like 2 cent specs, with the equity. You just don't get to use the equity in the shares you've bought to purchase further shares. The general idea with ML is however, IMO, that you buy good quality stocks that provide a dividend and the ML interest is offset by the dividends (to whatever degree) and the capital growth in the stock is free!  (if the stock goes up of course) I think managed funds are good to buy with ML. If the funds average return is 10% and you're paying 8% interest on the loan then it's effectively 2% for doing nada. Long term investor plan of course...


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## tech/a (20 November 2007)

*Re: Margin lending question*

A further addition to comments.

I used BT for years---very good. But their list of marginable stocks was around 360.

ANZ's list as around 1100 including funds.
Plus there are around 180 shortable stocks!

I changed!


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## Snagglepuss (20 November 2007)

*Re: Margin lending question*



bigt said:


> ..so to clarify...if you have a margin loan facility (i.e. have been approved etc)...you dont pay interest unless you utilise the margin loan to purchase assets? Makes sense.




Just be aware that many margin lenders have a minimum loan amount on which interest is charged. For example, you may have to pay interest on $20K even though you are only using $10K. Check the details with each lender.

- Snaggle.


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