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Money Makeovers with Peter Switzer
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Peter Switzer

Protected equity loan

I am interested in taking out a protected equity loan, however my cash flow may not cover the first year's interest payments. Can I borrow more to cover for this payment?

There are some protected equity lenders that offer a secondary loan to cover the first year's interest payment on a protected equity loan. However, generally speaking, when gearing into shares it is important to have plenty of excess cash flow for many reasons, including in the event of a margin call. So if your cash flow is low, you may need to reconsider your gearing strategy.

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Disclaimer: This is generic financial advice only. Any investment decision should be made after careful review of your individual financial situation, risk tolerance, investment objectives and time horizon. These Questions have been answered by Peter Switzer and Mark Leahy. Mark is the Managing Director of Switzer Financial Services. If your question is answered, it will be published in the Peter Switzers' Money Makeovers on Yahoo! Finance, and you will be notified by email.

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