A margin loan is a product which allows you to borrow money to invest in shares or managed funds. While you can potentially grow the value of your portfolio using a margin loan, there are risks to be aware of and it’s important to consider whether a margin loan is right for you.
If it is a tool you feel confident in using and you’re weighing up your options, Canstar has assessed the margin loans in our database to discern which ones offer outstanding value to investors.
Canstar Research assessed 11 margin loan products from nine providers based on an equally-weighted combination of:
- Price – products with lower historical variable and fixed interest rates scored higher
- Features – products earned points for offering features that improved the application, trading, management, support, and closing aspects of the loan
Products were rated against consumer profiles based on two types of investor: those who predominantly invest in the share market (Share Investor), and those who mainly invest in managed funds and who may use an adviser (Managed Funds Investor).
This year, three products took out a 5-Star Rating for one or both of the consumer profiles used.
5-Star Rated margin loans in 2020
Below, in alphabetical order by provider name, are the margin loans which received a 5-Star Rating this year.
|Provider||Product name||Consumer profile|
|Leveraged||Direct Investment Loan||Share Investor|
|Nabtrade||Margin Loan||Managed Funds Investor, Share Investor|
|Westpac||Online Investing Loan||Managed Funds Investor, Share Investor|
What made for a 5-Star margin loan in 2020?
Leveraged – Direct Investment Loan
Margin lending specialist Leverage has been recognised with a 5-Star Rating for its Direct Investment Loan in the Share Investor profile. Canstar Research found that this loan performed strongly on price due to the low interest rates on offer relative to the other products assessed. The Leveraged fixed rates were deemed to be particularly competitive. This is the second year in a row that this Leveraged product has won a 5-Star Rating.
According to Leveraged, its Director Investment Loan comes with a “simple” online application process, no minimum loan amount, a maximum credit limit of $500,000, and no application or establishment fees.
nabtrade – Margin Loan
For the second year in a row, nabtrade’s Margin Loan product has received a 5-Star Rating across both the Share Investor and the Managed Funds Investor profiles. Canstar Research found that its fixed and variable rates were competitive relative to the other products assessed, while its loan management and support features also provided value to customers.
nabtrade says its Margin Loan offers investors access to over 700 international equities, and integration between their loan and nabtrade accounts.
Westpac – Online Investment Loan
For the fifth year in a row, Westpac has won a 5-Star Rating for its Online Investing Loan across both profiles, after first receiving one in 2016. Both its variable and fixed rates stood out for the value they offered investors, and the product also received a high score for its features.
Looking at some of the specifics of the Westpac Online Investment Loan, it offers several features including a maximum credit limit of $500,000 and the ability to integrate your loan account with a Westpac Online Investing Account.
For more information on how products are assessed and what makes for a 5-Star margin loan, take a look at the 2020 Margin Loans Star Ratings methodology document. You can also compare margin loans with Canstar to see if you can find one that suits your investment needs.
If you’re unsure whether investing using a margin loan is right for you and what the potential risks could be, you may want to seek guidance from a financial adviser.