An investment loan is simply borrowing money to invest in acceptable shares or managed funds. You use your existing cash, shares or managed funds as security and we lend you money to invest. This form of borrowing is also known as 'gearing'.
An LVR is assigned to each investment in your loan portfolio. The LVR is the percentage of the investment's market value that the investment lender will lend you. For example, Westpac investment lending will generally lend between 30% and 80% of the value of acceptable shares and managed funds.
The amount available for further investment at any one time is called your funds available. It's calculated by taking the lesser of your borrowing limit and your credit limit and then subtracting your loan balance.
A margin call is triggered when your loan balance exceeds your borrowing limit by more than the buffer we allow. If you get a margin call, you need to bring your loan balance back under your borrowing limit within a short period. The buffer offered by Westpac investment lending is generally 10% of your portfolio market value. This means that small changes in the market or your loan balance won't trigger a margin call.
There are two ways to clear a margin call:
Add more acceptable security, which can include cash