NAB Equity Builder - too good to be true?

Discussion in 'Sharemarket Investing Platforms, Tools & Services' started by BPhil, 27th Nov, 2017.

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  1. Carpe Dividendum

    Carpe Dividendum Member

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    No, you don’t need to create a new account for it. You can pay the monthly P&I from any of your existing transaction accounts. It just needs to be able to make automatic debits (so you can’t do it from an ING Savings Maximiser or a UBank Ultra Saver, for example, but you can from an Orange Everyday or a UBank Ultra transaction account).

    Correct, deductibility doesn’t depend on which account you pay to or from.
     
  2. Luca

    Luca Well-Known Member

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    I have tried to run some numbers for a $0 cash down situation (getting a P&I loan from equity available on IP).

    Interest Rate P&I using property as security (25% cash down) = 5.05%
    Interest Rate NAB EB (75% LVR) = 5.05%
    Yield on LIC/ETF (FC included) = 7.50%
    Tax Rate = 37.00%
    Loan Value Total (Property + NAB EB) = $ 400,000.00
    Loan Repayment @ 15 years = $ 38,083.20/year
    LIC/ETF profit @ 15 years = $30,000.00/year

    This already puts you in a -$8k cash flow problem each year.
    Averaging interests at @ $11,416.57/year and allowing for tax to be paid on the $30k profit + deduction of the interests, the whole package will cost around $15k/year x 15 years = $225k total.

    We will have around 100% profit in 15 years.

    Did I miss something?
     
  3. Gockie

    Gockie Life is good ☺️ Premium Member

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    Brilliant thread. This is to me a case of "when the student is ready, the teacher will appear"

    Took me a long time to come around to thinking about shares but a property meetup, Peter Thornhill, a few very thought provoking Shares vs. Property threads, the multiple threads on share investing plus my Facebook group have landed me here. I'm really surprised I hadn't heard of this product before!
     
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  4. almostthere

    almostthere Well-Known Member

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  5. oracle

    oracle Well-Known Member

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  6. Mooser

    Mooser New Member

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    Not sure if this has done the rounds yet: one of the better calculators I've found for leverage: Leveraged Financial Goals Simulator

    After you've plugged in your numbers, click on the details top right and export to Excel.
     
  7. asw1

    asw1 Well-Known Member

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    Out of curiosity has anyone successfully negotiated the rate on this product?
    If so, what was your approach?
     
  8. ChrisP73

    ChrisP73 Well-Known Member

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    Not exactly your question but the following from @oracle back in late 2017 might be of interest

     
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  9. asw1

    asw1 Well-Known Member

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    Qualify for $2mill?!!?
    I can't imagine what sort of income you must have to qualify for that.
    I have a reasonable income but didn't even qualify for much more than my annual salary.
     
  10. lamecrocs

    lamecrocs Well-Known Member

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    Sir, you might have too much debt :)
     
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  11. asw1

    asw1 Well-Known Member

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    That's with zero other debt...
     
  12. ChrisP73

    ChrisP73 Well-Known Member

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    Well then you should be able to smash it in a very short period, in which case the rate isn't that critical at all. Rinse and repeat for 10 to 15 years, then sit back and smell the roses ;)
     
  13. apk

    apk Well-Known Member

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    Do you guys think interest rate on this product may go down?
     
  14. rizzle

    rizzle Well-Known Member

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    Has anyone run the numbers on using this product versus a debt recycling strategy with loan split facility?

    I'd be keen to see a side by side projection of returns based on a few key variables (market returns, interest rate differential on products, initial lump sum of equity builder vs. tranche of debt recycling)
     
  15. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It is sort of two different strategies. But both strategies can be combined or run separately
     
  16. MikeyM

    MikeyM Well-Known Member

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    Keen to hear thoughts on this too. With two recent rate drops, theoretically this should reduce the rate on this product also?
    5.05% seems high in the current environment.
     
  17. oddshapes

    oddshapes Well-Known Member

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    I had a look the other day, I thought it was dropped to 4.80%
     
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  18. MikeyM

    MikeyM Well-Known Member

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    Hmm ok, is still showing 5.05% on their website.
    I must be missing something.
     
  19. oddshapes

    oddshapes Well-Known Member

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  20. apk

    apk Well-Known Member

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    Does not apply to existing loans, just in case if anyone wondering. :p

     
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