|
You are here: Home
An Equity Finance Mortgage (EFM)® is a new type of home loan.
If you are interested in applying for an Equity Finance Mortgage. Please click here to fill in our application form.
An Equity Finance Mortgage (EFM)® can help you to:
• Reduce the upfront and ongoing costs of purchasing a new property; or
• Reduce your current monthly mortgage repayments (via a refinancing of your existing loan); or
• Buy a more expensive property than you may otherwise be able to afford.
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:
• 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, 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.
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! 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.
The original idea behind the EFM loan was to create a better alignment of interests between the borrower and lender:
• If you do well, and your property's value increases, the lender can do well;
• However, if you suffer, and you realise a loss when you sell your property, you may not be charged any regular interest whatsoever on the EFM;
• In fact, the EFM lender may share up to 20% of the losses, leaving you with less to repay on the EFM loan than they originally lent to you!
We strongly recommend that you obtain independent legal and financial advice in relation to this EFM loan prior to entering into the EFM loan contract.
Read on for some examples of how an EFM can help you!
Please carefully read and review the EFM Disclosure Document. This website does not take into account your personal objectives, financial situation, or particular needs. You should obtain a copy of the EFM Disclosure Document and the EFM Terms and Conditions Booklet and consider them before making a decision about whether to enter into an EFM.
|
