How does a margin loan work & what is an LVR & LSR?
A margin loan is a loan that uses approved shares, managed funds & cash that you already own as security for a flexible line of credit to allow you to buy more shares or units in managed funds. Through the effect of leveraging it may offer you greater exposure to both the share and managed fund markets and may offer you a greater return when the price goes up. Leverage may also expose you to greater losses when the price goes down. An LVR, or Loan to Valuation Ratio, is the amount of the loan borrowed in proportion to the value of your approved share or managed fund. For example, if a particular share has an LVR of 70% – this means we allow you to borrow up to 70% of the value of the share on the proviso that you provide the other 30%. An LSR, or Loan Security Ratio, is the amount of the loan borrowed in proportion to the value of your portfolio’s lending value. As the market value of your portfolio rises and falls, so does its lending value. If the market falls far enough, your portfo
