What is a margin call?
A margin call occurs when:
- your Current LVR exceeds the Margin Call LVR; or
- your Current LVR exceeds the Maximum Gearing Ratio
Remember,
- Current LVR is your loan amount divided by the value of your accepted investment/s and is expressed as percentage. It is also known as your gearing level.
- Base LVR is the maximum gearing level that your portfolio can reach before it would be in buffer. It is the maximum loan amount that you can borrow against your accepted securities and is expressed as a percentage.
- Margin Call LVR is equal to the Base LVR plus the buffer.
- Maximum Gearing Ratio is the maximum level of gearing we will allow, expressed as a percentage against your portfolio (disregarding any financial product with a lending ratio of 0%).
How to resolve a margin call:
If a margin call is triggered on your account, you can resolve it by:
- Depositing money into your investment loan to reduce your loan balance; and/or
- Providing us with additional accepted shares or managed funds to increase your portfolio value; and/or
- Selling a sufficient amount of your portfolio to reduce your loan balance and gearing level.
When your account is in margin call
You must immediately adjust your gearing level so that it is below the lower of Base LVR, or the Maximum Gearing Ratio.
