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.
If you have, has it been beneficial?
Hi Wezwaz
Think you are slightly confused with your post.
I assume you are referring to Adelaide Bank's Shared Equity scheme in conjuction with Rismark.
It is very much a horses for courses product and i have done a fair few now.
In fact one of the forum members here was the first client over the line with the new product earlier this year so he maybe to comment on how he feels the product worked for them.
Richard Taylor | Australia's leading private lender
No Richard, it's exactly as I stated – Equity Finance Mortgage – and it works as indicated. Do a search on the internet.
Sorry my friend i think it is you who are confused.
EFM is the branded trademark Shared Equity Scheme that Adelaide Bank launched through a panel of mortgage managers in Feb of this year.
It is exactly as i stated with the amount of upto 20% funded by Rismark Internation who have patented the product.
The Bank does not contribute an amount of 20% to the purchase price as Rismark do not hold a Banking License.
The 40% gain is payable in one of 3 events one being sale, refinance or at the end of 25 years.
Have no problem at all in you airing an opinion it is just nice to make sure the information provided is correct so that the other forum members do not get the wrong impression of a product.
Richard Taylor | Australia's leading private lender
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.
As i said from the start it is a shared equity scheme with EFM being the product name Adelaide Bank are marketing it under.
Yes i have used on many ocassions and as mentioned did the first deal in Australia for a forum member.
The official launch was Feb 2007
Richard Taylor | Australia's leading private lender
Guys …. No need to argue …..
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.Cheers
Hi John
Not so much attention to details just like to make sure that other forum member are adequately advised.
Richard Taylor | Australia's leading private lender
Cheers Richard<br /
:-)” title=”>:-)” class=”bbcode_smiley” />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.
Yoss
You are bang on but i am told it may not be too much longer before the product is open to investors.
Richard Taylor | Australia's leading private lender
Hi guy's,
Yes we have had a EFM since early february in which Richard set up for us.
In our situation the wife is off work on maternity leave and over the next few years will be only on my income.
As people have said it's inportant to have some sort of goal with your exit strategy.As sonn as the wife goes back to work on full time wages we will refinance or pull equity out of another property
and pay out the EFM.It will work well for us in the short term.
doesnt take my fancy over a longer period of time but everyone's situation is different I guess.
CheersFound 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.
WW
Not only is the product post code restrictive it is also restructed to maximum purchase price within the acceptable post codes.
If you need a post code check let us now and I can look it up for you.
Richard Taylor | Australia's leading private lender
:-)” title=”>:-)” class=”bbcode_smiley” />
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