Anybody got any experience or alternatives with NAB Super Lever (margin lending) ?
NAB Super Lever for SMSF
MITM on 31/10/2022 - 15:15
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BT does margin lending
People should be less scared about margin loans, considering the fact that they are happy to enter into massive debt for property without a second thought
It's not really the margin loan itself that's scary. The scary part is whether the person knows what they're in for if the 'gamble' doesn't go their way. All it takes is a slight movement in the opposite direction and all could be gone.
Same with housing though…
@Scantu: Not really. It's rare that the value of property will drop by the amount of the deposit within the space of minutes, hours or days. And when it does, there's a chance that it'll go back up in the longer term as long as you can make the set regular mortgage payments.
In a margin call a sudden drop, even if it looks temporary, can cause the bank to call it in and there'll be no chance of recovery. Not only will you lose your "deposit", but you could lose whatever other assets you have.
@bobbified: Any regular index fund, you can apply what you said in the first paragraph to.
Check your bank contact. You can be called on property too. In the same manner. And the things you said that can happen due to a margin call can also happen there.
You are an exemplar of how people misjudge risk in property vs shares because that's what they've been taught societally :)
You can be called on property too.
Theoretically, they can call it on a property, but the banks don't often do that because they're covered by the mortgage insurance that they force the mortgagee to take up where the deposit is less than 20%. How often does the price of property drop by 20% or more (and over what period)?
@bobbified: You're still biasing these comments toward property with no real justification.
Of course I'm not talking about buying GME on margin, just like I am not talking about buying a off the plan house in a mining town.
Plenty of places where property values have done just that.
You need to compare apples to apples.
Actually people should be scared. With property mortgage, bank won't take your property if your property value halved. Bank happily keep your mortgage as long as you pay.
With margin lending you could get margin call and lost everything just because the CEO do silly thing like smoking weed.They actually can, read your contact
Compare apples to apples, no-one here is talking investing in meme stocks or single companies on margin
@Scantu: Please show an example of a single consumer home loan regulated under the National Consumer Credit Code that permits non monetary default to permit recovery of possession if the bank considers the value of the property has declined.
The days of Bankwest defaulting business loans for such non-monetary default was extensively covered in the Royal Commission.
@kipps: Nice goal post shift, I'll resume talking to you when you move them back, or otherwise, not at all :)
@Scantu: I said they won't, not they can't.
If you keep on paying your mortgage at timely intervals then you are an asset to the bank. Bank want to keep you owning the assets as long as possible. It requires time and resources for the banks to liquidate your asset.
On the other side, Bank makes profit when they do margin calls. The process is very streamlined and can be done automatically with no human touch
@Indomietable: No profit made by margin calling, you are ceasing to become an asset to the bank if you are margin called. It's about the bank's exposure to risk.
You have a poor understanding of finance.
There are a few other levered products without the complexity of ensuring you meet the requirements for NAB super lever e.g. GEAR/GGUS, and many more USA based options
Thanks, I'll take a look.
NAB isn't ideal when they can call in the loan at any time, even if you're within the LVR.I could easily get a personal loan or use home equity, but this would mean a share purchase in own name, which when it comes time to move it into super for retirement, causes a capital gains event.
Borrowing funds inside Super during accumulation phase eliminates CGT when drawing down (selling off) in retirement phase, which is why investment property loans can be funded inside Super with a LRBA.Consider setting up a no frills SMSF and use levered ETF products (or managed funds, I think BT might have a couple)
Be careful using leveraged ETFs long term - https://www.afrugaldoctor.com/home/volatility-decay-dont-hol…
Isn't there still strictly capital gains, but the tax on income and income from capital gains is 0%? Doesn't negate your point though.
There's a ton of rules compliance-wise however (e.g. you can't stay at your investment property if the fund owns it) and LRBA loans have you personally on the hook for the super fund's debts (if it's an investment property you can't sell a room off to pay a margin call).
I wouldn't touch it with a sixty foot barge pole (but then again my investment sophistication is placing a bet on today's long-shot).
don't get into margin lending unless you always have cash around 40-50% of your portfolio for margin call and ride out the volatility
else you will be force to liquidates at bankruptcy priceyou want to be the guy on the other side of the trade when margin call rampant and you buy stuff REALLY cheap
I benefit from two such scenario, 2008 and Covid-19 and I am sure there will more to come in the next 2-3 decades
I don't have an answer to your question, but I hope you know what you're doing.