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What is a margin loan?

Published April 2021

A margin loan allows you to borrow money to invest in shares, managed funds and exchange-traded funds. 

How does a margin loan work?

A margin loan allows you to borrow funds to invest in shares while using cash, shares, or other approved financial assets as security for the margin loan.

How much can you borrow using a margin loan?

A margin loan allows you to leverage your existing investments in order to increase your available funds to invest.

The amount you can borrow will depend on a number of factors like your existing equity (cash, shares or managed funds) and a credit limit based on an assessment of your financial position.

What shares can you use as security for a margin loan?

ANZ has Approved Securities Lists (ASL’s) that cover a wide range of shares (PDF 381kB), managed funds (PDF 419kB) and options (PDF 353kB). Each security in the list will have a corresponding loan to value ratio (LVR).

What is an LVR?

Loan to Value Ratio (LVR) refers to the amount you can borrow against a particular security. The LVR may range from 0% to 80% of the price of the security depending on the size of the company, financial performance and volatility of the share price. In most cases, bigger and more stable companies attract a higher LVR than smaller and more volatile ones.

As an example, Company A has a 75% LVR while Company B has a 60% LVR.

This means if you want to buy $50,000 worth of A shares, the bank will lend you $37,500 and you need to fund the remaining $12,500 with your existing cash or shares (taking into consideration the LVR on these shares).

If you want to buy $50,000 worth of B shares, the bank will lend you $30,000 and you need to have $20,000 of security to complete the purchase.

What is an LVR
Share Total investment 60% LVR 75% LVR Amount you need as collateral
A $50,000   $37,500 $12,500
B $50,000 $30,000   $20,000

What are the risks and benefits of a margin loan?

Like any other investment, using a margin loan to buy shares and other securities has risks and benefits. We have outlined some of them here:

Benefits of a margin loan

Access to additional funds 

A margin loan allows you to access additional funds that can be used to build a larger investment portfolio. This means you have the potential to build wealth more quickly than you would with your own savings. 

Tax deduction benefits

Interest charged on a margin loan may be tax-deductible. You can also pre-pay the interest on a margin loan and may be able to include it as a tax deduction during the financial year when you pre-pay the interest.

Wide range of assets to invest in

most margin lenders offer a wide range of approved securities which may allow you to diversify your portfolio. By spreading your investment across a range of shares, you may reduce the impact on your portfolio when markets are volatile.

Possibility to magnify gains

With a margin loan you can invest more than you would otherwise have, so your investment has the potential to magnify your gains. However, this magnifies the possibility of losses as well.

Risks of a margin loan

Possibility to magnify losses

As with other leveraged investments, you need to be aware that losses can be magnified and you may lose some or all of your capital invested.

Interest rate level

Your borrowing cost may change depending on the movement of interest rates during the period of the margin loan.

Margin call

A margin call occurs when the value of an investment falls and you do not have enough collateral to remain above the allowable LVR level. When this happens, the margin lender will ask for additional collateral. If you do not meet the margin call, the margin lender may sell your securities to pay down the margin call.

What happens when you get a margin call?

A margin call is triggered when the value of your share portfolio is less than the allowed LVR, this may be due to market movements or interest charges resulting in your LVR exceeding your maximum gearing ratio. A margin lender may also change the LVR of specific companies, this may impact upon your share portfolio’s LVR.

For example, if you are geared at your maximum lending value and your $50,000 portfolio drops to $35,000, you will be asked to provide more collateral such as cash or shares, to adjust your gearing level. Another alternative is to sell the shares in your portfolio to bring down the loan balance.

How do you reduce the possibility of a margin call?

  • Borrow less than the maximum lending value
  • Diversify to help reduce overall portfolio volatility

Keep in mind that borrowing to invest in shares is a high risk strategy for experienced investors. While you may get bigger returns when the markets go up, it can also lead to larger losses when the markets fall. You will still need to repay the loan and make interest payments even if your investment falls in value. We recommend that you speak to a financial adviser to decide if a margin loan is right for you.

Find out more about the ANZ Share Investment Loan.

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Applications for ANZ Share Investing accounts are no longer available. However, you can still apply for an ANZ Share Investment Loan.

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The ANZ Share Investing service is provided by CMC Markets Stockbroking Limited ABN 69 081 002 851 AFSL 246381 (CMC Markets Stockbroking), a Participant of the Australian Securities Exchange (ASX Group), Sydney Stock Exchange (SSX) and Cboe Australia (Cboe) at the request of Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ). Disclosure documents relating to ANZ Share Investing products and services are available on or by calling us on 1300 658 355. ANZ is the issuer of the ANZ Cash Investment Account and ANZ V2 PLUS Account. The obligations of CMC Markets Stockbroking are not guaranteed by ANZ. CMC Markets Stockbroking and ANZ are not representatives of each other.

The ANZ Share Investment Loan is provided by Australia and New Zealand Banking Group Limited ABN 11 005 357 522, AFSL 234527 ("ANZ").

An ANZ Share Investment Loan is subject to investment risks, including possible losses in income, capital invested and additional liability for the loan. We therefore strongly advise you talk to your financial planner, tax adviser and/or stockbroker and ensure you understand the risks, the specific tax implications as well as the legal and financial ramifications of a share investment loan.

ANZ does not give personal advice about the ANZ Share Investment Loan or it's tax implications. This information is of a general nature and has been prepared without taking account of your objectives, financial situation or needs. You should consider the appropriateness of the information, having regard to your objectives, financial situation and needs. ANZ recommends that you read the ANZ Share Investment Loan Product Disclosure Statement and the ANZ Investment Lending Terms and Conditions which are available at or by calling the Client Services Team on 1800 639 330 between 8.00am and 6.00pm (Sydney/Melbourne time) during ASX trading days before deciding whether to acquire, or to continue to hold the product.

All ANZ Share Investment Loan applications are subject to ANZ’s credit approval criteria. Fees and charges apply and are available here or by calling the Client Services Team on 1800 639 330 between 8.00am and 6.00pm (Sydney/Melbourne time) during ASX trading days.