FAQs

General

  • What is the first step?
  • Is Westpac BlueChip20 guaranteed by Westpac?
  • Who is BT Margin Lending?
  • How are my initial funds invested?
  • Do I retain a minimum cash holding?
  • How does Westpac BlueChip20 re-balance my portfolio?
  • How does the minimum trade size work?
  • Can I add additional shares to my investment?
  • Can I stop gearing (drawing down the loan) my investment?
  • Do I have to pay interest on a minimum loan balance of $20,000?
  • What is the fastest way to invest if I have an additional lump sum?
  • When will the direct debit occur for my initial investment?
  • How are my regular contributions invested?
  • Can I suspend my Regular Gearing and Regular Contribution Plan?
  • What happens if a new company enters the S&P ASX Top 20?
  • What has the performance of Westpac BlueChip20 separately managed account been?
  • Am I the beneficial owner of my shares?
  • What happens with my dividends?
  • What is a margin loan and how does it work in relation to Westpac BlueChip20?
  • How does the Westpac BlueChip20 loan work?
  • Do I pay a fee to open a Westpac BlueChip20 Loan Account?
  • Who provides my BlueChip20 loan?
  • Do I have to make regular loan repayments?
  • What are the risks of borrowing to invest in the share market?
  • What is a margin call?
  • What are the benefits of borrowing to invest?
  • What’s a borrowing limit?
  • How is funds available calculated?
  • What's a loan to value ratio (LVR)?
  • What’s a credit limit? Could it affect my funds available and ability to trade?
  • What’s the difference between a credit limit and a borrowing limit?
  • How can I manage my account to ensure I don’t breach my credit limit?
  • What on-line reporting do I receive?
  • What tax reports do I have access to on-line?
  • What are the fees and charges?
  • Who may apply/invest?
  • I am moving overseas, what do I need to do ?
  • What additional information is required if I am opening an account in the name of a Trust?
  • How can I close my Westpac BlueChip20 account?
  • What must my application include?
  • What is the first step?

    1. You should read the BT Margin Lending BT Securities Ltd Financial Services Guide

    2. You should read the following documents carefully and consider whether to invest in Westpac BlueChip20:

    Financial Advisers

    Personal Investors

    3. Decide on an initial investment size (minimum $2,500). This will be matched with an equal amount from your margin loan

    4. Calculate an amount that you can comfortably afford as a monthly contribution (minimum $250)

    5. Select the amount you want to draw down from the loan each month (minimum $250 each month and must be equal to or greater than your monthly contribution)

    6. Complete the application documents and return to BT Margin Lending. Note that to apply for a Westpac BlueChip20 investment, you need to complete both the Westpac BlueChip20 Investment and the Westpac BlueChip20 Margin Lending application forms.

    Before you make a decision or complete the application documents, you should seek advice from your financial adviser.

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    Is Westpac BlueChip20 guaranteed by Westpac?

    No, none of Westpac Banking Corporation or any of its related entities stands behind or otherwise guarantees the capital value or the investment performance of Westpac BlueChip20.

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    Who is BT Margin Lending?

    BT Margin Lending is widely acknowledged as a leading provider of margin lending facilities. As one of the leaders in margin lending in Australia, BT has been helping thousands of Australians with their investments for over 25 years.

    BT Margin Lending is part of the Westpac Group and a pioneer of margin lending in Australia.

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    How are my initial funds invested?

    The investment process begins with an initial contribution (minimum $2,500). These funds are typically drawn directly from your nominated bank account.

    Upon receipt of your initial contribution, the first margin loan draw down occurs. The amount of the initial contribution and loan draw down will be determined by you and/or your financial adviser.

    The combined funds will then be used to purchase shares in the S&P ASX Top 20, in the approximate ratio of their market capitalisation.

    For example, if your total initial investment is $5,000 and BHP represents 15% of the S&P ASX Top 20 Index, you will buy BHP shares to the value of $735 (after allowing for the minimum 2% cash holding). If Commonwealth Bank represents 10%, you will buy CBA shares to the value of $490 (after allowing for the minimum 2% cash holding).

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    Do I retain a minimum cash holding?

    A cash balance of approximately 2% of your total investment must be retained in the Westpac BlueChip20 cash account. This cash is eligible for interest payments.

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    How does Westpac BlueChip20 re-balance my portfolio?

    From time to time, your share portfolio may be rebalanced to reflect the changing values of the companies in the S&P ASX Top 20, or to retain your 2% cash position. This will be undertaken automatically through the buying or selling of shares within your portfolio. The purpose of this is to seek a return on your portfolio that is consistent with the return of the S&P ASX Top 20 Index.

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    How does the minimum trade size work?

    Your investment is managed using a “minimum trade size” to ensure an optimum level of trading to keep your portfolio within the index weightings. An example of how this works follows:
    Your current total portfolio value is $10,000. Your minimum trading size is set to the default of 0.20%, this is 0.20% of your total market value ($10,000) which will be $20.
    You invest $500 this month. Your portfolio is invested according to the S&P Index 20 – the $500 across all stock lines. Say for example BHP represents 10% of the index, hence your portfolio. You should have around $1000 of BHP stock in your portfolio (10% of $10,000). So, your additional investment funds should be invested as per the index weighting, 10% of $500 is $50 into BHP. $50 is greater than $20 (your minimum trade size) therefore you will buy as many BHP units as possible for that $50. If each unit is $23.30 on the day you buy, the remaining $2.40 will remain in cash. You will not buy a security in your portfolio if the amount to invest in that stock, in order to maintain your portfolio balance, is less than $20. In this situation those funds will remain in cash until such time as the buy amount for that security is greater than $20.
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    Can I add additional shares to my investment?

    You can lodge any additional listed security that is currently on the Australian Stock Exchange (ASX) by completing the Westpac Bluechip 20 "Lodging Shares" form. When lodging the stock, please note that you must select whether you would like a holding lock to be placed on the stock or not. If you select to put a holding lock on the added security then the amount of stock will be held and will not form part of the portfolio for rebalancing. If you don't select to add a holding lock the stock you have added will be included in the portfolio for rebalancing and depending on the stock and volume, may be sold to the index weighting. Standard Loan to Valuation Ratios (LVR) will apply per stock.
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    Can I stop gearing (drawing down the loan) my investment?

    Westpac BlueChip20 is a mandatory gearing investment. You can request a "Regular Gearing Holiday" for 3 months at any time. Otherwise, if your loan balance is $20,000 or above you can cease regular gearing. Once the loan balances decreases below this minimum, you will be required to commence regular gearing again.
    In addition, if your gearing ratio (your loan balance as a proportion of your market value) is above 65% you can cease drawing down your loan until such time as the ratio is below this level. To decrease your gearing ratio you can either pay additional funds to your loan to decrease your loan balance, or sell stock which will also pay down the loan balance.
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    Do I have to pay interest on a minimum loan balance of $20,000?

    No, the minimum loan balance for regular gearing accounts is $2,500. This is documented in the Margin Lending Application, in the Supplementary Terms for Borrowers investing in Westpac BlueChip20 - point 20 on page 32.
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    What is the fastest way to invest if I have an additional lump sum?

    The fastest way is to credit funds directly to the SMA cash account; this will be invested on the next rebalancing day. You will have received your BPAY details in the "Welcome" email, you received when you first set up your account. If you do not have this, please call 1800 816 222, 8am to 6.30pm (AEST), Monday to Friday.
    BPAY
    Biller code: 347112
    Customer Reference Number: As per your email.
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    When will the direct debit occur for my initial investment?

    As soon as your application is approved, we will debit your nominated bank account for your initial contribution. Please ensure you have adequate funds in this account, as you may not receive email notification of loan and investment approval before the direct debit takes place.
    Thereafter, the direct debit for your monthly contributions will occur on the 15th day of each month, or if this is a weekend, on the next working day.
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    How are my regular contributions invested?

    Your regular monthly instalment contributions will be debited directly from your nominated bank account on the 15th of each month. Your regular monthly loan draw down will also occur on the 15th. The combined funds will be used to purchase additional shares. (If the 15th of the month is not a business day, these will occur on the next business day).

    Your monthly contribution will be used to buy the shares that your portfolio is the most underweight at the time. This process occurs automatically and ensures that your portfolio reflects, as closely as possible, the performance of the S&P ASX Top 20 Index.

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    Can I suspend my Regular Gearing and Regular Contribution Plan?

    Yes, you can suspend your Regular Gearing and Regular Contribution Plan up to 3 months in any 12 months period. You need to complete, sign and send the Regular Gearing and Investment form to BT Margin Lending. After 3 months your existing direct debit and loan draw down amount for your Westpac BlueChip20 investment will recommence.

    The following are three options to suspend your Regular Gearing and Regular Contribution Plan:

    1.   Suspend direct debit and pay the total investment from the loan

    This option is to cease the direct debit (clients funds) from the nominated account and fund the whole investment from the loan.  This may only occur if the loan is within the Borrowing limit.  The investment will not occur if the loan draw down will cause the client to be in margin call.  After a period of 3 months, the system will default to commence the direct debit again.

    2.  Suspend draw down from the loan and pay the total investment from nominated bank account

    This option is to cease the draw down from the loan and fund to whole investment from funds debited from the nominated bank account.  After a period of 3 months, the system will default to commence the loan draw down again.

    3.  Suspend Regular Contribution Plan completely

    This option temporarily suspends the whole investment in BlueChip20.  Both the direct debit and the loan draw down will cease.  After a period of 3 months, the system will default to commence the direct debit and loan draw down again.

    Note:  Westpac BlueChip20 is a regular gearing account.  You must participate in the Regular Contribution Plan of at least $500 total each month.

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    What happens if a new Company enters the S&P ASX Top 20?

    The key benefit of the Westpac BlueChip20 strategy is the ability to constantly accumulate a direct share ownership in Australia's top 20 companies. When the market capitalisation of a company increases and becomes one of the top 20 stocks, it will be automatically purchased for you. The shares in the company it has replaced will be sold, with proceeds reinvested into the new company.

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    What has the performance of Westpac BlueChip20 separately managed account been?

    To view the model portfolio performance of the SM0001 - Smart Investment AXS Top20 Model (used in the Westpac Bluechip20 account) or the S&P/ASX 20 Accumulated Index click here.

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    Am I the beneficial owner of my shares?

    Under the Westpac BlueChip20 structure, you are the beneficial owner of your shares.

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    What happens with my dividends?

    There are three available options for the treatment of dividends. The default option is to have your dividends directed to the interest-bearing cash account linked to your portfolio. The funds will then be reinvested across your share portfolio, subject to maintaining the minimum cash holding of approximately 2% of your portfolio value. Alternatively, you can choose to have the dividends paid into the account linked to your SMA account, which for Westpac BlueChip20 is always your margin loan account. If you select this option your dividends will be paid to the loan, effectively reducing your loan balance. Lastly you are able to have your dividends paid to an external bank account that will not be linked to your BT Margin Loan. If you have an existing account you can change your current dividend option by completing a Westpac Bluechip 20 – change of Bank Account details form.

    You can change your dividend option at any time however you can only choose one of the options at any one time and not a combination of all three. The linked bank account must be your margin loan.

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    What is a margin loan and how does it work in relation to Westpac BlueChip20?

    The margin loan allows you to effectively increase your investment capability, allowing you to invest more than you could just using your own funds.

    A margin loan is borrowing to invest, using your shares as security for the loan. The margin lender determines the amount they will lend on any approved security; this is called a Loan to Value Ratio (LVR). The shares purchased with the Westpac BlueChip20 portfolio provide security for the loan. The amount clients can borrow is determined by both the borrowing limit and credit limit.

    More than half of Australia's adult population now invests in the share market, a figure which is high in global terms, and increasingly margin lending is a common way through which Australian investors increase their participation in the share market. (Source: ASX)

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    How does the Westpac BlueChip20 loan work?

    You nominate an initial and monthly draw down on your margin loan account. These can be either:

    • An amount that matches your initial contribution and each month's regular gearing amount dollar for dollar; or
    • An initial amount and monthly draw down amount that you nominate.

    Minimum Loan Balance $2,500
    Minimum Monthly Loan Drawdown for Regular Gearing $250

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    Do I pay a fee to open a Westpac BlueChip20 Loan Account?

    There are no loan establishment fees for individual borrowers.

    Accounts established in the name of a company or trust will attract a fee of $200 to cover the cost of undertaking the relevant company search.

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    Who provides my Westpac BlueChip20 loan?

    The loan is provided by BT Securities Limited ABN 84 000 720 114 AFSL 233722 (BT Margin Lending).

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    Do I have to make regular loan repayments?

    No. Your Westpac BlueChip20 Margin Loan is an interest-only loan. Interest is calculated daily, charged monthly in arrears. The loan has no set time period and will continue for as long as your Westpac BlueChip20 account remains open. Should you wish to reduce your Westpac BlueChip20 Margin Loan balance at any time, you can either:

    1. BPay:
      Biller Code: 17111
      Customer Reference Number: This is the numbers-only of your BT Margin Lending client code. For example, if your BT Margin Lending client code is ABCDE12345-6 then your Customer Reference
      Number is "123456" (allow 2 working days for receipt of funds).

    2. Direct Credit to BT:
      Account Name: BT Margin Lending
      BSB: 262 755
      Account Number: This is the numbers-only of your BT Margin Lending client code. For example, if your BT Margin Lending client code is ABCDE12345-6 then your BT Margin Lending Account Number
      is "123456"

    3. Cheque:
      Payable to "BT Margin Lending". Please include your BT Margin Lending Account Number on the back and mail to BT Margin Lending postal address.

    4. sell shares to the value of your Westpac BlueChip20 Margin Loan repayment and use the proceeds to reduce your loan balance.

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    What are the risks of borrowing to invest in the share market?

    It is essential that the concept of gearing or leverage is understood.

    In deciding to borrow to invest, you need to appreciate that while gearing can increase returns through capital growth and greater dividends, it can also have a similar negative impact when markets fall.

    A dollar for dollar draw down strategy (as described above) represents a 50% gearing ratio. A gearing ratio not exceeding 50% is available on both the Initial Contribution and the Monthly Instalment Contribution. If the amount of your Initial Contribution is the minimum amount of $2,500 and the amount of your Monthly Instalment Contribution is the minimum amount of $250, your gearing ratio will be 50% at the time each amount is invested. You should be aware that the higher the gearing ratio, the greater the risk of margin calls and of capital loss. (See below for a description of margin calls).

    The suitability of gearing in your particular circumstances is a decision that should be made in consultation with your adviser.

    At a gearing level of 50%, a move in the underlying value of the portfolio will magnify the result on the equity in the portfolio by two times. A 10% gain will produce a return on equity of 20% less any borrowing costs — a 10% loss will mean a drop in equity value of 20% plus any borrowing costs.

    If the price of the shares included in your portfolio grows, the gearing ratio of the portfolio will reduce. This is an important measure of ongoing success of your strategy. Growth within a portfolio can also provide greater loan capacity.

    In the same way, if the price of shares included in your Westpac BlueChip20 Portfolio falls, then the overall gearing ratio of the Portfolio will rise and there may be a margin call made.

    Additional draw downs outside the regularly Monthly Loan Draw Downs can be made. Provided that the additional draw down will not result in the Security Value being less than the Security Value of the Portfolio so a margin call in respect of your margin loan would not be made, an additional draw down need not be accompanied by a contribution by you of an equal (or any) amount. Before requesting any additional draw down, you should consult your financial adviser and consider carefully the impact on the strategy employed from the outset.

    If at anytime you wish or are required to realise your holding in Westpac BlueChip20 and the amount of your margin loan (and interest and fees) were to exceed the net proceeds of the sale of your Westpac BlueChip20 holding, you could be required to make a cash payment to the lender to make up the shortfall.

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    What is a margin call?

    When you take out Westpac BlueChip20 account, a loan account with BT Margin Lending is established. Your obligation to repay this loan (including interest and fees) is secured over your Westpac BlueChip20 account.

    However, your obligation to repay the principal and pay interest is not limited to the value in your Account. So, if the value in your Account is less than the amount required to meet payments to BT Margin Lending, then you will have to use your other funds to make the payments.

    Also, if at any time the sum of the principal and interest on the loan exceeds the amount that the lender has allowed as the value at that time of your Westpac BlueChip20 Portfolio (which is referred to as Borrowing Limit) a margin call is made and the amount of the loan must be reduced. The Borrowing Limit of your Portfolio will not be the total market value of the Shares held for you; the Borrowing Limit of your Portfolio will generally only be between 40% and 70% of the market value of the shares that make up that holding at that time. A margin call is to be satisfied by the sale by Praemium of sufficient shares in your Portfolio and payment to the Lender using the net proceeds.

    If at any time you wish to close your account, or the lender exercises a right to close your account and the net proceeds of the sale of all your interest in your Westpac BlueChip20 holding is less than the amount of your Loan at the time (including interest and fees), you would be required to make a cash payment to the lender to make up the balance.

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    What are the benefits of borrowing to invest?

    Your Westpac BlueChip20 share portfolio invests in the top Australian blue chip companies, it will usually generate dividend payments. In most cases, these dividends will also include franking credits.

    Gearing your investment at a ratio of 50% (dollar for dollar) provides you with two times the value of dividends and franking credits you would ordinarily receive without gearing. These dividends may pay the majority of the borrowing costs (interest) on your loan.

    Depending on your personal circumstances, the interest on your investment loan may also be tax deductible.

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    What online reporting do I receive?

    Westpac BlueChip20 recognises that you may like to access to your share portfolio anytime, 24 hours a day, 7 days a week.

    Your share portfolio details are updated daily, so you can log on at any time and check the value of your shares at close of business and any trading activity that has occurred.

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    What tax reports do I have access to online?

    Buying direct shares in 20 different companies on a regular basis would normally generate significant paperwork. But when you invest through Westpac BlueChip20, all this is taken care of for you.

    The cost base of your shares is automatically adjusted with each trade and all dividend payments are recorded and paid to your account. Any corporate actions are automatically actioned and recorded.

    Complete and concise records, available online at any time, simplify the preparation of your annual tax return.

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    What are the fees and charges?

    There are certain fees and charges payable on your Westpac BlueChip20 account. All these costs are fully explained in the Westpac BlueChip20 Product Disclosure Statement.

    Product Disclosure Statement BlueChip20 Product Disclosure Statement (including the Supplementary Product Disclosure Statement dated 30 May 2014)

    Administration Fee

    There are fees associated with the ongoing administration of your Westpac BlueChip20 account. These fees vary depending on the total value of your share portfolio as follows:

    • First $500,000 – 0.48% p.a.
    • $500,001- $1,000,000 – 0.44% p.a.
    • $1,000,001 – $2,000,000 – 0.33% p.a.
    • More than $2,000,000 – Nil.

    The Administration Fee is calculated monthly in arrears based on the daily value of your account and is deducted directly from your account.

    Investment Fee

    The Model Portfolio Manager (BlackRock) charges an Investment Fee of 0.05% p.a. for providing and administering the Model Portfolio.

    Managed Fund Trading Fee

    For managed fund trading, a transaction charge of $27.50 will be split across all Accounts trading in a managed fund on that day. If your Account is the only Account trading a managed fund that day your maximum charge would be $27.50.

    This fee will be effective 1 September 2014.

    Adviser Service Fee

    Your financial adviser may charge you a fee for ongoing services relating to your Westpac BlueChip20 account. This may be up to 1.10%p.a. or alternatively a fixed dollar amount p.a.

    The Adviser Service Fee is calculated monthly in arrears based on the daily value of your account, and is deducted directly from your account.

    Direct Client Service Fee

    BT Margin Lending may charge a Direct Client Service Fee of up to 0.825% p.a. if your account is established without going through a financial adviser.

    The Direct Client Service Fee is calculated monthly in arrears based on the daily value of your Account and is deducted directly from your Account.

    Please note that only the Adviser Service Fee or the Direct Client Service Fee may be applicable.

    In-Specie Transfer Fee

    A $29.00 fee is payable for the transfer of each stock transferred out of your Account. There is no fee for transfers into your Account.

    Settlement Fee

    A Settlement Fee of $0.33 per securities transaction is payable in addition to any brokerage allocated. This fee is deducted from the cash holding of your Account at the time of settlement of the trade.

    Interest Rates

    BT Margin Lending interest rates

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    Who may apply/invest?

    An individual 18 years or older, a company or trust who is resident in Australia for tax purposes may apply to invest in Westpac BlueChip20.

    Individuals under 18 years old and superannuation funds may not invest in this product.

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    I am moving overseas, what do I need to do ?

    The Westpac Bluechip 20 account is only available to people who are Australian residents for taxation purposes. If you are moving overseas, you will need to terminate your Westpac Bluechip 20 account by completing the Investment and Loan termination form and returning this back to BT Margin Lending.

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    What additional information is required if I am opening an account in the name of a Trust?

    Trustee clients need to complete Section 5C of Westpac BlueChip20 Margin Lending Application and provide a certified copy of the trust deed.

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    How can I close my Westpac BlueChip20 account?

    If you wish to close your Westpac BlueChip20 account, you may withdraw all of your investment.

    If you wish that withdrawal to be effected by way of a transfer of all of the securities to you, Westpac BlueChip20 will not act on your instruction until you have paid directly to BT Margin Lending the balance of your margin loan in full (including all accrued interest and charges).


    If you wish that withdrawal to be effected wholly in cash, Westpac BlueChip20 will arrange for the balance of your margin loan to be repaid in full (including all accrued interest and charges) out of that cash. If the net amount of cash realised is less than the balance of your margin loan, you will be required to pay the shortfall directly to BT Margin Lending.


    You'll need to complete a Westpac Bluechip20 Termination Form Investment and Loan Termination form

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    What must my application include?

    For all new Westpac BlueChip20 accounts to be opened the following checklist must be completed.

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What’s a borrowing limit?

This limit is calculated by multiplying each investment’s market value by its loan to value ratio (LVR). As the value of your investments changes every day, so does your borrowing limit. For example, if your portfolio’s market value increased by 10% and LVRs remain the same, your borrowing limit will also increase by 10%.

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How is funds available calculated?

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.

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What's a loan to value ratio (LVR)?

An LVR is assigned to each investment in your loan portfolio. The LVR is the percentage of the investment’s market value that we’ll lend you. For example, we’ll generally lend between 30% and 80% of the value of approved shares and managed funds.

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What’s a credit limit? Could it affect my funds available and ability to trade?

Your credit limit is the maximum amount we may lend you, irrespective of the securities held on your loan. If you would like to discuss or change your credit limit, please contact our Customer Relations Consultants on 1800 816 222, Monday to Friday, 8.00am to 6.30pm (Sydney time).

Your credit limit can affect your funds available and ability to trade if your loan balance exceeds your credit limit.

Where your loan balance equals your credit limit, your funds available will be zero and you can no longer trade, draw down, get a cash advance using funds from your margin loan. Your regular gearing and investment will be ceased. You must take action to prevent your account from breaching your credit limit. Any breach will result in your loan being in default, and we may take action, including liquidating some or all of your portfolio.

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What’s the difference between a credit limit and a borrowing limit?

A credit limit is the maximum amount of credit that we’ll extend to you for your margin loan and is determined following an assessment process. This assessment process is already performed for some other Bank loan products. The borrowing limit is the loan to value ratio applied to the approved investments in your loan portfolio. A client can breach their credit limit without exceeding their borrowing limit.

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How can I manage my account to ensure I don’t breach my credit limit?

You should review your facility on an ongoing basis.

We’re providing a new service of early warnings to advisers and clients to help avoid a credit limit breach. This includes a letter/email when your loan balance approaches 80% of your credit limit and a phone call when your loan balance reaches 95%.

If you fail to take action during the early warning phase and should your loan balance exceed your credit limit for any reason, the account will be in default. At this point you can no longer draw down your loan, and we may exercise our rights following a default.

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Westpac BlueChip20 Features

  • Start with as little as $2,500 to buy Australia's top 20 blue chip shares
  • Regular monthly contributions start at $250
  • Brokerage as little as 25 cents per month
  • 24/7 on-line access to your investment portfolio