Equity Finance Mortgage (20% Interest Free Loan)

An Equity Finance Mortgage (EFM) allows you to borrow up to 20% of a property's value. There is no annual percentage rate applicable to an EFM loan hence no repayment of interest to be paid. Hence you cab reduce your monthly payments by up to 20% and increase your borrowing capacity for up to 25% or simply consolidate your dents to reduce you monthly commitments.

The Equity Finance Mortgage(EFM)can help you to:

• Get out of the renting cycle and into home ownership
• Buy the house you want in the suburb you want
• Buy a house instead of an apartment, 3 bedrooms instead of two
• Refinance your existing loan or consolidate debt to reduce your monthly
  repayments

The Equity Finance Mortgage (EFM), together with a Balanced Loan enables you to:

• Reduce monthly home loan repayments by up to 20%
• Increase your borrowing capacity by up to 25%

Reduce monthly home loan repayments by up to 20%.
Increase your borrowing capacity by up to 25%.
Reduce the upfront and ongoing costs of purchasing a new property.

An EFM works in conjunction with a traditional home loan. Together, they let you move some of the expense of a traditional home loan to later when you eventually sell your property. Here's how:

In summary there are two loans. A normal home loan and an EFM Loan which are done through the same lender.

An EFM allows you to borrow up to 20% of a property's value; There is no annual percentage rate applicable to an EFM loan, you read right ZERO INTEREST OR REPAYMENT, unless you are in default; You are not required to make any regular monthly interest repayments throughout the EFM loan, which you can hold for 25 years. Instead, when you sell the property or repay the EFM for some other reason, you repay the EFM amount you originally borrowed plus up to a 40% share of any increase in the value of the property (assuming you take out a 20% EFM).

If you take out a smaller, say, 15% EFM, then the lender will only be entitled to 30% of the growth, leaving you with 70% of the upside on your home.

And while nobody likes to talk about property values decreasing, if this does happen when you have an EFM and you are selling your property, you may not have to repay the full EFM loan amount - a feature unique to an EFM.

Specifically, if the value of your home falls, and you realise a capital loss when you sell your property, the EFM lender will share up to 20% of the realised losses on your property (assuming you take out a 20% EFM)! The share of the losses borne by the lender will depend on how much you borrow in the first place and how much your property has decreased in value. The lender will not share in any losses if they are not fully realised by you when you repay the EFM.

This product is only available to Owner Occupiers. Maximum loan ratio is 90% of the valuation of the property. Hence you can get a 70% home loan and a 20% EFM, or a 80% Home Loan and a 10% EFM. There is also nothing stopping you getting a 50% Home Loan and a 20% EFM.

Click here to download a comprehensive product guide.