Margin lending can boost returns by letting you invest more than you could with your own funds alone.
It also increases risk, as falling asset values can trigger margin calls and force you to repay or sell at a loss.
Your borrowing power depends on LVRs, which vary by asset and affect how much you can safely borrow.
Margin lending is a strategy where investors borrow money to invest in financial products like shares or managed funds. It is however a “high risk, high reward” strategy which can amplify both your gains and losses. A margin loan allows you to borrow funds to invest in managed funds, ETFs shares and other securities. However, while leverage can magnify gains, it also magnifies losses, and you may face a margin call if your portfolio value falls.
This guide breaks down how margin lending works, which brokers offer it and where to find the best margin loan rates in Australia.
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Margin lending is a high risk investment strategy that is best suited to experienced investors.
Compare margin loan rates in Australia
The table below compares 1-year fixed margin lending rates (paid monthly in arrears) from some of Australia’s leading online brokers. These rates are the most relevant for retail investors and reflect the actual cost of borrowing under typical conditions.
Important: We’ve done our best to collect the margin loan rates for every online broker in Australia. But in some cases these figures aren’t made public or are missing. For this reason, some trading platforms may not appear on our table. Variable rates are subject for to change at any moment so may not be accurate at the time you open an account.
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What is margin lending?
Margin lending involves borrowing money to invest, with your existing investments used as security. It functions similarly to a home loan, except you’re investing in shares, ETFs or managed funds, instead of property.
Your lender or broker will let you borrow up to a certain percentage of your portfolio - this is known as your Loan-to-Value Ratio (LVR). For example, if your shares are worth $100,000 and the max LVR is 70%, you could borrow up to $70,000.
But here’s the catch: if the market drops and your portfolio value falls, your LVR rises. If it gets too high, you might get hit with a margin call where you have to top up your account or sell some of your assets.
Using the example above, if the value of your loan falls from $100k to $90k but you’ve borrowed $70,000, the LVR becomes 77.8%, exceeding the max LVR and triggering a margin call.
What is a margin call?
A margin call happens when your loan-to-value ratio (LVR) rises above the lender’s limit. This usually means your investments have dropped in value. You’ll be asked to fix it by adding cash, selling investments, or providing more collateral.
What interest rate will I pay on my margin loan?
The interest rate on your margin loan depends on a few key factors including whether your rate is fixed or variable and how you choose to pay it.
Rates typically range from 7.5% to 10% p.a. as of mid-2025, with lower rates generally available for fixed-term loans paid annually in advance.
Most lenders offer multiple interest rate structures, such as:
Fixed rate (1–5 years): You lock in your rate for a set term. Rates are usually lower if you pay interest upfront (annually in advance), but you’ll need to have the cash available.
Variable rate: This moves with the market and is typically paid monthly in arrears. It gives you flexibility, but your repayments may increase if interest rates rise.
Interest paid monthly in arrears (standard): You pay interest at the end of each month. Rates are generally higher than fixed rates paid in advance.
Generally, the more flexibility you want, the higher the rate. Paying upfront for a fixed term usually gets you the lowest interest, while variable rates tend to be the most expensive but come with more freedom to exit or adjust your loan.
Before you choose a lender, compare both the headline interest rate and the repayment structure, because it’s not just the rate that matters, but how and when you’re expected to pay.
What’s your LVR in margin lending?
The Loan-to-Value Ratio (LVR) is the amount you can borrow against the value of individual assets or your overall portfolio.
Maximum LVR ratios are typically assigned to individual stocks, ETFs or managed funds by the lender. They can range from 10% to 90% depending on the lender’s risk assessment of the asset.
For example, nabtrade has a 60% maximum LVR for Tesla Inc (TSLA) and an 80% LVR for the Vanguard Australian Shares Index ETF (VAS).
To calculate the LVR for your overall portfolio, you’ll need to divide the total loan amount by the total market value of your portfolio.
And if you want to know your maximum portfolio LVR, you’ll just have divide your total loanable value by your total portfolio value.
Example portfolio: Say you’ve borrowed $40,000 for the portfolio below, valued at $60,000.
Investment
Value
Lender LVR
Loanable Value
BHP
$20,000
75%
$15,000
CSL
$25,000
70%
$17,500
VAS ETF
$15,000
65%
$9,750
Total
$60,000
-
$42,250
Your total portfolio LVR is = ($40,000 ÷ $60,000) × 100 = 66.67% LVR
Meanwhile, your max portfolio LVR = Total loanable value ÷ Total portfolio value = $42,250 ÷ $60,000 = 70.42% Max LVR This means your portfolio would only need to fall by about 6% before a margin call is triggered.
Benefits of margin lending
The biggest draw of margin lending is that it has the potential to amplify your profits.
Say you invest $50K of your own money plus a $50K margin loan. If your total investment grows by 10%, your return on your own money is actually 20% (minus interest) because you're using leverage.
There may also be tax benefits. Interest on your margin loan may be tax-deductible, depending on your personal situation and how you use the borrowed funds.
Increased Investment Capacity: Access to more funds to invest.
Potential for Higher Returns: Amplify gains if investments perform well.
Tax Benefits: Interest payments may be tax-deductible.
Risks of margin lending
The benefits of margin lending are only equal to the risks.
By using leverage on your investments, you risk magnifying any losses. In fact, your losses can exceed your initial investment, essentially putting you into debt.
There is the potential for margin calls, forced asset sales and paying interest on your loan even if your investments underperform. Volatile markets can quickly swing your loan-to-value ratio (LVR), so it’s crucial to understand how quickly things can go wrong.
Amplified Losses: Losses can exceed initial investments.
Margin Calls: Requirement to repay part of the loan or provide additional collateral if investment value drops.
Interest Costs: Ongoing interest payments regardless of investment performance.
Market Volatility: Increased exposure to market fluctuations.
During the 2008 GFC, investors who had borrowed heavily to buy blue-chip Australian stocks like BHP and NAB saw their portfolios plunge by over 50%. With high LVRs (some over 70%), many were hit with sudden margin calls as stock values fell. Unable to meet the calls in time, lenders automatically sold off their holdings, often at the bottom of the market, locking in steep losses and wiping out years of gains in days.
Is margin lending right for you?
Margin lending isn’t for everyone. It’s a strategy that is better suited to experienced investors with a strong risk appetite, stable income and the ability to take on losses.
Because the market can move quickly, you’ll need the discipline to actively monitor your portfolio and be prepared to make changes on short notice. If you’re looking for slow and steady, this strategy probably isn’t for you.
Before jumping in, ask yourself:
Investment Goals: Are you investing for long-term growth?
Risk Tolerance: Are you able to withstand potential losses?
Financial Situation: Is your income stable enough to cover interest and potential margin calls?
Investment Experience: Do you understand how the markets work and are you prepared to monitor your portfolio actively?
If in doubt, speak to a financial advisor.
How to set up a margin loan
Setting up a margin loan involves choosing a broker or lender, applying for the loan and setting up eligible investments as collateral.
The key to finding the right loan is to compare interest rates, fees, LVR ratio and minimum investment requirements.
Choose a broker: Look at the interest rates, fees and terms of the loan offered. You should also check which investments they support.
Apply for the loan. Once you’ve signed up to a broker, you’ll need to apply separately for the loan and will typically need to provide additional documentation and financial info.
Choose your collateral. Select investments to secure the loan. This is much like using your house as collateral against your mortgage.
Monitor your LVR. Make sure to stay below the required LVR threshold to avoid margin calls.
Plan repayments. A margin loan is like any other loan where you’ll need to make ongoing interest repayments, even during a market downturn.
When LVR turns against you
Tom used $50,000 of his own money and borrowed another $50,000 through a margin loan to invest in S&P/ASX 200 shares. This meant his portfolio was worth $100,000 and his Loan-to-Value Ratio (LVR) was 50%, well within the lender’s maximum limit of 70%.
But when markets dropped sharply during a global sell-off, the value of Tom’s shares fell to $65,000. His loan remained at $50,000, pushing his LVR to over 75%. His broker’s maximum allowed LVR was 70%, which triggered a margin call.
Tom had to either:
Deposit more cash or assets to bring the LVR back under 70%, or
Sell some of his investments - potentially at a loss - to reduce the loan balance.
This example shows how quickly leverage can turn against you. A 35% drop in portfolio value caused Tom’s LVR to spike, forcing him to act fast or risk having his shares sold off automatically.
Is margin lending legal in Australia?
Margin lending is legal but follows strict regulations under the Australian Securities and Investments Commission (ASIC).
Any brokers or lenders offering margin loans must hold an AFS license and must perform a risk assessment to determine whether the margin loan is suitable for any clients. As part of that assessment they’ll need to check income, liabilities and risk tolerance, similar to an approval for a home loan.
Brokers are also expected to monitor LVRs and notify clients if a margin call is triggered.
LVR is the percentage of your loan compared to your total investment value. A high LVR means higher risk of a margin call. If your investments fall, your LVR goes up, increasing pressure to act quickly.
Yes. Because you’re borrowing to invest, you can lose both your own money and the borrowed amount. If markets fall fast, you might be forced to sell at a loss or repay the loan out of pocket.
Often, yes. If the loan is used to invest in income-producing assets (like shares that pay dividends). Always check with a tax adviser, as deductions depend on your personal situation.
If you don’t respond to a margin call, your lender can sell off your assets without notice to recover the loan. This might lock in losses and leave you owing more if the sale doesn’t cover the full loan amount.
Kylie Purcell is an experienced investments analyst and finance journalist with over a decade of expertise in a wide range of financial products, including online trading platforms, robo-advisors, stocks, ETFs and cryptocurrencies. She is a sought-after commentator and regularly shares her insights on the AFR, Yahoo Finance, The Motley Fool, SBS and News.com.au. Kylie hosts the Investment Finder video series and actively contributes to the investment community as a judge and panellist. She holds a Master of Arts in International Journalism, a Graduate Diploma in Economics, and ASIC-recognised certifications in securities and managed investments.
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