Portfolio financing
How much can I borrow?
The ceiling is a loan-to-value ratio: the loan divided by the value of the collateral. A lower ratio is a smaller loan and a thicker cushion.
Key takeaway
How much you can borrow is the collateral value multiplied by the loan-to-value cap in the agreement. The cap depends on the securities. It is not one number for every portfolio.
The arithmetic
The rows below use $1,000,000 of collateral so the ratio is easy to see. They are not Haven’s schedule.
| Collateral | LTV cap | Loan |
|---|---|---|
| $1,000,000 | 40% | $400,000 |
| $1,000,000 | 50% | $500,000 |
| $1,000,000 | 60% | $600,000 |
What this means
If the collateral falls and the loan does not, the ratio rises. That is how a comfortable loan becomes a liquidation. The Haven SPX Box Rate is the reference rate for the financing. It does not set the loan-to-value cap.
Related
Borrowing against a portfolioWhat are the liquidation risks?How does this compare with brokerage margin?Haven SPX Box RateFinancing simulator
Haven Funding LLC is owned by Haven Systems LLC. Neither firm is a bank or a registered broker-dealer. Securities and execution services are provided through Interactive Brokers LLC. The Haven SPX Box Rate is a constant-maturity reference rate. It is not a Truth in Lending APR and not a commitment to lend.