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1. What is a "Self Designed Loan"?
2. What type of collateral does MutuaLoan
accept?
4. Am I going to receive any additional tax
documents like 1099 from you for the shares you control?
5. Is the interest that I pay tax deductible?
6. Can I use the loan like a brokerage firm's
margin account to buy more mutual funds or securities?
7. What can I use the loan proceeds for?
8. Can I pay it off at any time?
9. How much can I borrow and what is the ratio
of collateral to the total loan amount?
10. Can I sell one security to buy another
if it is tied up as collateral in my MutuaLoan account?
11. What happes if there is a severe downturn
in the market?
12. What happens if the market goes up and
my Mutual Fund shares are worth more but are tied up in my
MutuaLoan account?
13. What happens to my dividends or capital
gains on the securities used as collateral?
14. What happens when usually near the end
of the year, a Mutual Fund has a large capital gains distribution?
15. Are there any hidden fees or costs that
might come into play?
16. What is your Privacy Policy?
17. Glossary of Terms
1. What is a "Self Designed
Loan"?
Its our way of letting you determine many of the terms of
your loan, including some or all of the following:
. What collateral to use to secure
the loan.
. The interest rate for the loan.
. The size of your credit line
and initial check. (Minimum loan $10,000)
. Your payment size.
. The way in which you make payments.
At MutuaLoan, we put you in control of your financial assets.
If you prefer, your financial advisor can assist you.
2. What type of collateral does
MutuaLoan accept?
MutuaLoan accepts over 18,000 different mutual funds as collateral.
The full list of eligible mutual funds is available for lookup
- just visit the LoanbuilderT section of our website.
4. Am I going to receive any additional
tax documents like 1099 from you for the shares you control?
Yes, you will receive a single, consolidated statement for
all fund shares that are transferred into your MutuaLoan account.
If today you have multiple accounts in different places, we
can supply you with one unified account statement (only for
those funds transferred to your MutuaLoan account).
5. Is the interest that I pay
tax deductible?
In most cases, it probably is not. Nevertheless, be sure.
Always check with your tax advisor.
6. Can I use the loan like a brokerage
firm's margin account to buy more mutual funds or securities?
No. As a matter of fact, we ask you when you apply for the
loan what you plan to use the proceeds for, and we can not
make the loan to you if you plan to use the money to buy securities.
7. What can I use the loan proceeds for?
Anything you want, except as explained in the answer to Question
6 above. When periodic cash needs arise, borrowing intelligently
against your mutual funds allows you to stay invested and
avoid the capital gains taxes associated with redemption of
shares. This loan is termed a "Non-Purpose" loan
by the Federal Reserve
8. Can I pay it off at any time?
Of course. And with MutuaLoan, there are never any prepayment
fees.
9. How much can I borrow and what is the ratio of
collateral to the total loan amount?
The amount you may borrow is depends on the value of the mutual
fund shares that you own. We can handle loans up to $300,000
on the Web site. Call (800) 670-0650 for custom quotes above
this amount. Our collateral ratios range from 50% to 90%,
depending on the volatility of your securities.
10. Can I sell one security to buy another if it
is tied up as collateral in my MutuaLoan account?
Yes, but we reserve the right to charge a small transfer fee.
Some changes might result in a "re-balancing" of
your account. This "re-balancing" usually takes
the form of additional shares being pledged or a one time
payment that reduces your loan outstanding. It also may cause
a change in your interest rate.
11. What happes if there is a severe downturn in
the market?
A safety zone is established on every loan, and it is described
it more detail on our loan documents. Your loan is monitored
by our systems on a daily basis. Should the value of your
collateral fall outside of the acceptable range, we contact
you immediately via electronic mail. If there is a downturn
in the market, and we are unable to reach you, we may have
to sell all or part of your securitites to preserve the collateral
ratio. The collateral ratio is just a term that relates to
your borrowing power; i.e., it is the ratio of your loan balance
to the market value of the securities that you have in your
account. If we can reach you, you will have the opportunity
of adding more securities, making a one time cash payment
to reduce the loan principle, or both.
12. What happens if the market goes up and my Mutual
Fund shares are worth more but are tied up in my MutuaLoan
account?
If the value of your securities rise, you can contact us and
seek an increase in your credit line
13. What happens to my dividends or capital gains
on the securities used as collateral?
Your dividends and capital gains distributions on collateralized
shares are treated in the manner you direct. We can continue
to treat them the same way they were handled before you obtained
your MutuaLoan.
14. What happens when usually near the end of the
year, a Mutual Fund has a large capital gains distribution?
When a fund pays a large capital gains distribution due to
sales of positions within the funds investment portfolio,
this sometimes creates an unplanned tax burden to you, the
individual investor. This distribution also causes a drop
in the NAV (Net Asset Value of each share), the fund share
price. For a shareholder using this fund for collateral with
MutuaLoan, the effect of such a distribution may be to bring
your loans collateral ratio close to (or even below) our acceptable
limit. We try to anticipate such possibilities when our system
calculates this ratio at the loan origination stage. However,
if the ratio gets close to being over the limit, we may have
to notify you to add more collateral, or pay-down the loan
somewhat with a cash payment or sell a portion of your collateral.
Often, the capital gains distribution serves to increase your
number of shares, which usually will offset any need for collateral
adjustments
15. Are there any hidden fees or costs that might
come into play?
MutuaLoanT is here to establish a long-term client relationship
with you. Our fees are plainly stated. We want to provide
a new, intelligent way to lower your borrowing costs, help
you stay invested, and avoid capital gains taxes. MutuaLoan
is one of the least expensive loans that you can find when
compared to other forms of credit, such as credit cards, or
personal loans
16. What is your Privacy Policy?
17. Glossary of Terms
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