What is LVR?
When you have a margin loan, you’ll probably be interested to know what the LVR is for the stocks you have in your portfolio. LVR stands for Loan to Value Ratio. It’s a percentage figure that represents how much you can borrow against a particular stock.
For example, if a stock has an LVR of 70%, the maximum amount we will allow you to borrow is up to 70% of the value of your holding, on the condition that you provide the other 30%.
CommSec offers a wide variety of Accepted ASX Listed Equities and Accepted Managed Funds that you can borrow against. In our Accepted Shares List (also known as Approved Securities List), we provide details on what shares and managed funds are accepted, and what the LVR is for each one.
There are a few different types of LVR:
- Current LVR is your current gearing level. It’s calculated by dividing your loan balance by the market value of any securities held on your margin loan (excluding securities with 0% LVR).
- Base LVR is the maximum gearing level that your portfolio can reach before it would be in buffer. This is calculated by dividing your Portfolio Lending Value by your Portfolio Market Value (excluding securities with 0% LVR).
- Margin Call LVR is equal to the Base LVR plus the buffer amount of 5%. When your Current LVR exceeds the Margin Call LVR, you will be in Margin Call.
What is the buffer amount?
We provide your margin loan with a buffer amount to allow for small market fluctuations. The buffer is there to give you the opportunity to reduce the gearing level of your portfolio before a Margin Call is triggered.
The buffer amount is published on our Accepted Securities List and is currently 5%. The buffer amount is subject to change.
You can identify when your loan is in buffer when your Current LVR is between your Base LVR (the maximum approved lending limit for your portfolio) and your Margin Call LVR. This is also shown as a status for your Margin Loan on the portfolio page of the website.
Approved Securities List and LVRs
Approved securities are any assets (shares, managed funds, or cash) that are considered when we calculate your portfolio’s lending value. You can find our Accepted Shares List and Accepted Managed Fund List here.
How often is the Approved Securities List updated
We publish a revised Approved Securities List at the beginning of each month. However, we may update the list at any time if necessary.
How do I find out the latest changes to LVRs
Approved security lending ratios can be found in the Accepted Shares and Accepted Funds Approved Securities Lists. Any LVRs that have been changed since the last published list will be shown at the top under the heading "LVR Changes". LVR changes will also be highlighted in grey throughout the list to indicate any changes made in the previous month.
What is the Portfolio Lending Value?
A security's lending value is calculated by multiplying the lending ratio (LVR) of a security by its market value.
The total of all the lending values in your portfolio is your portfolio's lending value. This is the maximum amount you can borrow at a particular time, using your portfolio as security on your margin loan. As the lending value is based on market values, the lending values will fluctuate with market movements.
Remember, you can reduce your risk by borrowing less than the maximum.
To learn more, please contact CommSec Margin Lending on 13 17 09 between 8am and 6pm Monday to Friday (Sydney time) or + 61 2 9115 1402 if calling from overseas.
For the purpose of CommSec Margin Loans, Commonwealth Bank of Australia reserves the right to vary the list of securities and the lending ratios at any time without notice and at its total discretion. Neither the Commonwealth Bank of Australia nor any of its related entities make any recommendations (express or implied) about any securities listed above or give any guarantee as to the payment of income or repayment of capital.
See CommSec Margin Loan Risk Disclosure, Important Information and Disclaimer. Consider the product disclosure statement available from the Commonwealth Bank of Australia, as the product issuer, at commsec.com.au before making any decision about the product and whether it is appropriate for you.
