With a Suncorp Bank Margin Loan, the amount you may borrow is determined by the maximum lending ratio for the securities in your portfolio (or borrowing limit) we are prepared and agree to and your credit limit.
These limits work together to ensure you maintain an acceptable proportion of debt to equity in your portfolio and that you don’t borrow more than you can afford based on your circumstances at the time you apply for the loan and at any time a credit re-assessment is undertaken.
Borrowing Limit
The borrowing limit is the maximum loan balance allowed before your account is in margin call. Your borrowing limit is determined by the individual securities in your portfolio and their respective Loan to Value Ratios that we determine, provided in the Acceptable Securities List.
As security values change, your borrowing limit will change accordingly. If security prices fall, your borrowing limit will also fall and your loan balance may exceed your borrowing limit. This means you are in margin call and need to reduce your loan back to acceptable limits.
Credit Limit
When you take out a Margin Loan, Suncorp Bank will set a maximum limit for your lending account based on a number of factors including your financial situation and credit assessment.
This is the maximum amount you may borrow under your loan irrespective of your borrowing limit. You can request a credit limit increase at any time, in which case Suncorp Bank will reassess your credit limit to see if an increase is suitable. We may also decrease your limit as a result of a credit re-assessment.
Here’s how it works
If, for example, you had $50,000 worth of shares in a company and the maximum LVR on that security was 40%, you could borrow up to an additional $20,000 to purchase shares, provided this did not exceed your credit limit. For more details on how borrowing and credit limits work, please see the example below.
| Assessed Credit Limit | $25,000 | ||
| Security Value | $50,000 | ||
| Portfolio LVR | 40% | 60% | 75% |
| Borrowing Limit for security | $20,000 | $30,000 | $37,500 |
| Funds available for borrowing | $20,000 | $25,000 | $25,000 |