Has anyone used one of these new Equity Finance Mortgage products? A bank will contribute up to 20% of the value of an owner occupier property, which you are not required to pay interest on. The catch is they are entitled to 40% of any gains when the property is sold.
I don't care about the intimate details and don't want to argue about it. It is known as an equity finance mortgage and what you are saying sounds the same as what I'm saying. What I'm interested in is if anyone has used the product. The product is new and was only introduced this year.
You are both correct and talking about the same thing.
The concept is designed for budding home buyers who would like to get into the property market. The Adelaide Bank EFM product is one of the most popular …. in this case the property title is placed in your name. The bottom line is that it gets you into the property game! So at the end of the game …. assuming the property value rises in value, you take 60% of the increased equity. Not bad huh! Better than 60% of nothing? Consider it a partnership or JV where you control 60/40… afterall the property game is about controlling property, not really owning it nowadays?
Make sure you do your homework on where you want to buy …. and what the property market is doing in your region of choice. You should make sure you have a detailed plan of action over the next 5-10 years or at least the next full property cycle after which it is likely that the property has doubled in value.
Another such product is O2B or Option2Buy …in this case … they hold the risk and the title until the end of the termed contract. They also charge you a fee and ongoing rent, insurance and savings plan. visit their website to find out more ….
These and other products are not for everyone … but can be used very effectively if used correctly and for the right reasons within your goals.
Good luck with your goals Wezwaz! I can see that you are very attention to detail Richard, but can sometimes get lost in the concept of simply sharing general info in the forum.
Worth reminding anyone who comes across this thread that the Equity Finance Mortgage through Adelaide is for owner occupiers only , so not a solution for someone looking to use directly for an IP. Of course, you could refinance your PPOR into one to reduce your repayments and use the freed up surplus income to service said IP.
Found out the EFM isn't very widely available as yet. Not even in every capital city. I'm interested in purchasing in Toowoomba. You'd hardly call this the backblocks with a population of over 100,000. I guess still being relatively new it will be more readily available as time goes on.