Answer
An allocation is a way of borrowing money to invest with at a lower interest rate. By allocating funds, you inform us that you will borrow a specific amount in the coming month. In return, you will receive an interest rate that is lower than the usual debit rate. See our Feeschedule for an overview of our current debit rates.
Important to know
- Be aware that the maximum amount you can allocate is not constrained by how much we can loan you. The maximum amount of money you will be able to borrow is always constrained by our Risk-model. It is thus possible to allocate more funds than you can borrow, which means that you would be charged interest on a higher amount than you can use. Please refer to our Investment Portfolio Risk Handbook to determine how much you can borrow. As we are an Execution Only broker, we cannot calculate this for you.
- You will always get charged over the full allocation, regardless of how much you have used.
- If you borrow more money than you have allocated, you will be charged the default debit rate over the surplus amount borrowed.
- An allocation will always take effect in the next month.