Lending Criteria - Margin Loans

I haven't used a margin loan account for a number of years but I'm sure it hasn't changed that much. I'm looking for an institution that will approve a margin lending facility to someone with no income but has ~$200,000 cash.

I have some cash sitting in a bank account in my wife's name only. For the later part of last year it was earning a very reasonable return just sitting in an interest bearing account, especially considering the carnage going on in the stock market at the time. With all these IR cuts over the past 3-4 months, the return in the account is no longer all that good.

Anyway, My wife is a stay at home mum, so she doesn't earn any money. I want to open a margin lending account in her name only to take advantage of the tax benefits.

Any ideas as to where to start looking?

Cheers

A loan with no income? Isn't that how the crisis started?

Most margin loans that I've looked at are typically treated as asset lends.

This means that if you have the equity, they'll give you the money. It's not a big deal if you can't make the interest payments - they'll just take your shares off you instead, and if the value of the shares drops, they sell you up until they get their money back ... so there's relatively little risk for the lender (and selling your shares to recover their money does not have the same negative connotations as selling someone's home does).

You shouldn't have too much difficulty getting a loan - LevEq and St.George were both pretty easy I think - but it was a while ago I applied, so I'm not sure what criteria they look for these days.

With $200K cash, you could (in theory) borrow up to $467K to buy shares/funds at 70% LVR (in reality you won't want to gear this high) - to give yourself a portfolio worth around $667K.

I suggest aiming for an LVR closer to 50%, so you should be able buy $400K worth of assets with your $200K (assuming the max LVR for the shares/funds you invest in is high enough).

Thanks for the help Sim, As you rightly suggested I was only planning on asking for a $200k limit so that will max the facility out at 50% LVR.

Cheers