The loan to value (“LTV”) is a percentage (as determined by EasyEquities) of the net asset value of your Qualifying Securities in your selected investment accounts.
The LTV Threshold is currently equal to 48%. Should your LTV exceed the LTV Threshold, you will be deemed to be in breach of the Agreement and EasyEquities will automatically sell Qualifying Securities in your Selected Investment Account/s to bring your LTV back to an acceptable level.
- For example, if on the day you applied for the Margin Loan, the qualifying securities in your TFSA or ZAR account (which ever you selected to cede and pledge to EasyEquities) was R100, and EasyEquities initially used an LTV of 33%, you would therefore qualify for a loan of up to R33.
- Thereafter, if the NAV of your qualifying securities (factoring in the inclusion percentage) drops to R75.00 (e.g. the value of your qualifying securities drops as result of unfavourable market conditions), then your LTV will be 44%, which will be calculated as follows:
= R33/R75 x 100.
- Therefore, your LTV will be above the permitted amount and you will receive notice that you are LTV is under review.
- Should the value of qualifying securities which you have pledged to EasyEquities, drops to R65.00, then your LTV will be 50.8%, which will be calculated as follows:
= R33/65 x 100
- Therefore, the EasyCredit system will automatically sell a portion of your Qualifying Securities in order to reduce your LTV below the LTV Threshold of 48%.
If you want to avoid, the system automatically selling a portion of your Qualifying Securities, then you should deposit funds into your ZAR account, prepay a portion of your loan or purchase more Qualifying Securities to being your LTV back to an acceptable level.