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Margin Loans Margin loan LVR is being calculated incorrectly

Discussion in 'Finance & Banking' started by handyandy, 19th Jan, 2008.

  1. handyandy

    handyandy Well-Known Member

    Joined:
    6th Jun, 2006
    Posts:
    312
    Location:
    Sydney Nsw
    Hi All

    Having a slight problem with Colonial margin lending. On my monthly statement it informs me that I am at 69% LVR yet when I calculate the LVR I am only at 52%.

    I brought up this problem with them some time ago but didn't follow up as I had only just consolidate from BT to Colonial and just assumed that it was a glitch.

    I then forgot about it as it really didn't unduly concern me as there was still plenty of capacity. Now, with the markets falling it becomes a concern so I phoned them again yesterday to finally get an answer that I am calculating the LVR correctly but they are not including the extra security that I added as Colonial have exceeded their limit for said MF.:confused::(

    By adding the extra security I did not increase the drawings so they basically have more security covering the original loan. What the

    I am awaiting their answer.

    Cheers
     
  2. handyandy

    handyandy Well-Known Member

    Joined:
    6th Jun, 2006
    Posts:
    312
    Location:
    Sydney Nsw
    Continuing the sage.

    I did not get called but none the less I wanted to ensure that my position is well and truly comfortable.

    What were my options to simply bring my (miscalculated) LVR back to where I would be more comfortable :-

    1) Sell
    2) Draw down on a LOC to move into margin
    3) Transfer some unencumbered shares into my margin account.

    Sell was out of the question as I wasn't in any need to sell

    Use LOC to reduce margin loan. I fixed my margin loan in June 07 for 1 year. None the less I thought if I tranfered from the LOC to margin there would be some sort of credit back of interest in the margin. Not so. Without winding up the fixed loan any money deposited would be takien into account as security but not reduce the margin loan amount thus ending up paying double interest.

    Transfer unencumbered shares. This is what I am proceeding with. Simple process as Calia is part of CBA and commsecc so all easy and done over the phone.

    Cheers