How to use margin financing to cash out

Q & AHow to use margin financing to cash out
Stanley asked 3 months ago

Hi all,
I have a question regarding margin financing. May sound silly as I have not used margin before. Currently using cash upfront HLebroking. My understanding of margin financing is it allow us to perform stock purchase with value that exceeded our pledge collateral by certain multipliers.
In one of the webinar Peter mentioned that we can actually borrow and cash out money out from Margin account.
May i know how do we actually do that?.
Thanks.

1 Answers
Best Answer
KCLau Staff answered 3 months ago

You first apply for the margin financing facility with the bank/broker.
Say you apply RM100k. You apply this upfront and stamp duty is required. The more you apply, the higher the cost. 
Then you will have RM100k sort of like overdraft facility. You don’t use it, you don’t pay interest. 
Although you apply RM100k, you still need stocks holding as collateral to withdraw money.
For example, say you have RM300k worth of stocks with HLE. And when you need cash, you can ask the banker to send you the RM100k that you apply earlier. That means you don’t necessarily use the RM100k to buy stocks. You can take it out as cash, and just pay interest every month. 
By the way, the interest is automatically included in your margin financing account. So technically you don’t pay the interest with cash on hands.