Margin Loan

Interest Rates are subject to change without notice. All rates are indicative only. Other fixed terms & firm rates available on application. Margin Loans and ETOs involve risk - see the Margin Loan and ETO Risk Disclosure, Disclaimer and Important Information. For a complete list of potential fees and charges that may apply to your account, please read our Financial Services Guide (PDF, 1539kb). Fees and charges are subject to change without notice.

The three most common forms of collateral used in margin loans are listed securities (otherwise known as 'shares' or 'equities'), managed funds and cash.

The type of securities you have and their composition in your portfolio will determine how much you can borrow. The amount you can borrow relative to the value of your investments is known as the Loan to Value Ratio (LVR). The LVRs and borrowing limits of each accepted equity are set out in our approved security lists. These may change at our discretion.

To reduce your loan and increase borrowing power, you can lodge more of the approved securities or transfer cash into your margin loan. Alternatively keep cash in your Commonwealth Direct Investment Account and lodge it as security on your loan.

If you don't currently have a CommSec Margin Loan, Apply Now and complete the refinancing section of the application.

If you already have a CommSec Margin Loan, complete and return the Refinance Request Form.

You will need to attach a copy of your existing margin loan statement and ensure you have a sufficident credit limit on your CommSec Margin Loan.

Lending ratios on approved securities may be different to other providers, so check our approved security lists, or use the WhatIf Portfolio Simulator when you login to your CommSec Margin Loan.

To find out more, contact us on 13 17 09 from 8am to 6pm AEST, Monday to Friday.

Before you start, make sure your name and address matches the details you provided for your CommSec Margin Loan exactly. If they don't match, refer to option 4 below.

• Option 1: Transfer from an existing CommSec account

If you wish to transfer stock to your margin loan from an existing CommSec trading account, navigate to the Transfers page on your Margin Loan and select Transfer Shares From another CommSec Account to my Margin Loan. Or you can call us on 13 17 09 between 8am and 6pm AEST, Monday to Friday.

• Option 2: Transfer from another broker

If you wish to transfer stock from an external broker, please complete and sign the Broker to Broker Transfer Form and return to us for processing.

• Option 3: Transfer Issuer Sponsored Stock

To transfer Issuer Sponsored stock, navigate to the Transfers page on your Margin Loan and select Transfer Shares From an Issuer Sponsored holding to my Margin Loan, or provide us with a signed written request and your latest holding or dividend statement.

• Option 4: Transfer Issuer or CHESS (Broker) Sponsored Stock in another name

To transfer stock to a CommSec Margin Loan that isn't registered in your name, you have two options:

1. Complete an Off Market Transfer Form to change the name of your registered stock to the name on your CommSec Margin Loan. A fee of $54 per Off Market Transfer applies.
2. Establish a third-party mortgagor for your loan, where security is held on a separate trading account but still considered part of your loan collateral. To request this option, contact us on 13 17 09 between 8am and 6pm AEST, Monday to Friday.

Forms can be returned by post as indicated, or emailed to marginloan@commsec.com.au. Most transfers take between 24–48 hours.

Once the transfer is complete, you may need to update the share registry with your new dividend and communication details. This is usually required whenever you are transferring stock to a new HIN.

To transfer existing managed funds, complete a Standard Transfer Form and include one of the following:

• An original, completed New Managed Fund Application Form.
• A copy of a recent holding statement.

Post the original form and supporting documents to the address on the form.

Every investment involves some level of risk. A CommSec Margin Loan is a powerful tool that boosts your investment potential, multiplying the effect of price movements on your initial capital.

The key risks of margin lending are as follows:

• Adverse market conditions may result in a reduction in your portfolio value, which can increase your gearing level and trigger a margin call. 
• We may reduce or remove the LVR applied to some or all of your investments or to your whole portfolio at any time, which may result in a margin call.
• Tax legislation or marginal tax rates may change and have an adverse impact on your tax position.
• Default events or enforcement events may occur, the consequences of which may include all amounts owing becoming immediately payable. Refer to the PDS for details on default events.
• Your financial situation may materially change, adversely affecting your margin loan.
• Adverse market and/or stock-specific conditions may result in the value of your security being insufficient to repay your loan.

Although margin calls are a potential risk, they can also provide you with important performance indicators. Unlike investing with your own cash or unsecured funds, investing with a margin loan gives you the opportunity to view key indicators and provides notification to take action.

This means you can closely monitor the performance of your investments and quickly identify underperforming assets, so you can liquidate them before any further losses are incurred.

If a margin call does occur, you are required to reduce your gearing level by either:

• reducing your loan balance; or
• increasing the level of equity in your loan.

Just as you can top up your margin loan with extra cash when a margin call occurs, you can withdraw surplus cash when your portfolio is performing strongly—if your gearing levels and credit limit permits. If you don’t have surplus cash to adjust your gearing levels when required, you may be required to sell some of your securities at a less than preferred price.

Equities and managed funds can fluctuate in price from day to day, which means some investments may offer a better return than others. You can easily manage any risks and avoid margin calls by considering these 10 tips:

1. Stay disciplined

A disciplined approach can help you make better investment decisions. Before you start, determine how much you can borrow; the amount of capital you are willing to commit; your trading strategy; which industry and assets you will invest in; and entry and exit prices.

2. Research

When you purchase stock, you become a part-owner of a business. Research the financial health of these businesses and any inherant risks using our comprehensive research tools and analyst reports.

3. Stagger your entry into the market

You can reduce the risk of incorrectly timing the market by using dollar cost averaging—investing the same dollar amount on a regular basis. You can automate this with a regular gearing plan (managed funds) or conditional orders and price alerts (shares).

4. Diversify

Reduce the risk of individual stock price movements or LVR changes by spreading your investment across different companies, assets and industries. This means if one investment falls in value, it may be offset by a rise in the value of another. When you have five or more accepted securities, you can also take advantage of CommSec Portfolio LVR to create an additional buffer and access bonus stocks.

5. Borrow less

Only using part of your total borrowing capacity to invest will help protect you against margin calls triggered by a price drop.

6. Watch your cash flow

Make sure you can cover any interest repayments and consider reinvesting income from dividends back into your margin loan, to offset interest costs and reduce the principal loan. Pay your interest through a bank account rather than capitalising to the loan — capitalised interest will increase your loan and result in higher interest expenses over time.

7. Fix your interest rate

Transfer part or your entire loan to a fixed rate for a selected term, to eliminate the risk of rising interest expenses.

8. Monitor your investments

CommSec offers a suite of tools to help you monitor your portfolio and loan status. You can use price alerts to notify you when a stock has reached a pre-determined price, or set conditional orders to create an automated stop-loss order instructions.

9. Protect yourself with Options

Exchange Traded Options can allow you to keep your existing shares over periods of market uncertainty, while protecting you against losses from falling share prices.

10. Take action early

If you notice your gearing is getting too high and has approached or reached your buffer, take action before a margin call is triggered.

Once your CommSec Margin Loan is established, a new account number starting with '7' will appear on your account summary page. Follow these steps to get started:

• Transfer existing shares or managed funds into your margin loan, or use our online funds transfer request to transfer cash from your nominated bank account.
• How much you can borrow will be determined by factors such as the Loan to Value Ratio (LVR) of your existing securities; the LVR of new investments; and your credit limit. If you have a CommSec Margin Loan Trading Account, you can use the WhatIf Portfolio Simulator to help manage risk.
• To buy shares, simply place an order via the CommSec website or mobile app. You can also place an order by speaking to a CommSec Account Manager on 13 17 09. To invest in managed funds, you will need to complete a new application and/or an additional investment form.
• You can choose to have interest taken from your bank account, or capitalised onto the loan. By default, your loan will be set to variable interest paid monthly in arrears, but you can fix all or part of your loan balance and choose to pay in advance or arrears

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