NAB Equity Builder - too good to be true?

Not sure this is true. The 2% DISCOUNT is for the life of the loan, the rate itself is not fixed.

 

Don't know aif already mentioned or not but product, NAB Equity Builder, was given favourable reviews by Noel Whittaker in his recent newsletter:
Noel News | Noel Whittaker

And Noel was even on a webinar with NAB about the product (haven't listened to yet) at nabtrade webinar: Borrowing to invest
(there is a recording of it)

 

@Xenia you’re definately a marketing genius. You sure know how to get others attention.

I was going to add a reponse but it seemed too much like work and of course we retirees avoid that like the plague.

 

So do you have a problem with this loan product or not? Your comments seem off topic.

 

Crypto equity builder coming soon.....

 

shhhh you are not allowed to talk about that here.
this is only for serious people LOL

 

Wondering what @Alex Straker thinks of the NAB equity builder product???

 

So does this product behave similar to a LOC? I.e. can I draw down on it as required to keep some dry powder?

 

Its not a LOC but a term loan. It looks like it is approved up to a certain limit and you can use these funds to purchase - seems like it might be possible in stages (actually you have to instruct NAB to purchase because their nominee company will be the legal owner until you pay off the loan).

 

Also, NAB Equity Builder programs allow the monthly principal repayment to be suspended (on request), once the gearing level within a loan facility drops below 30%. If monthly principal repayments have been suspended, and the gearing level rises back over 40%, principal repayments will automatically restart.

https://www.nabmarginlending.com.au...p-kit/NAB_Equity_Builder_Product_Brochure.pdf

 

Are there any concerns about this condition?

^The special rate for variable loans applies to new NAB Equity Builder facilities drawn between 1 August 2017 and 31 December 2017. The discount will apply for the life of the loan, or until varied or withdrawn by NAB.

 

Yes!

 

So if your gearing is below 30% & doesn't rise up beyond 40% then it is essentially interest only loan?
If you had $30k & were approved for a further $70k then you have $100k to invest. If you only use your $30k & $30k from the loan, then repayments can be interest only. I'm guessing you'll have to pay the principal at some stage

 

There doesn't have to be any repayments, if they allow it, so not interest only but capitalising interest. You will still have the short loan term to consider though.

 

Oooh, that is actually neat. Essentially would act as a margin loan with a better interest rate and a really weak margin call.

 

You can't capitalise interest on this product
Overview - NAB Margin Lending

 

What happens if a repayment holiday is granted? it wouldn't be interest free!

 

• Minimum loan is $10,000
• Minimum deposit can be as low as $4,000.

@Peter_Tersteeg

How did you go with you NAB guy?

 

After a previous post indicated it's not secured by real estate, I didn't follow up. That was my main concern.

Products like this are generally outside the mortgage broker space. They tend to go hand in hand with financial planning and stock broking.

 

Might be a stupid question - but is there anything to stop you from using a debt recycling strategy along the lines of:

1. Use an IO split (paid out then redrawn) from a PPOR to buy shares (100K loan B from bank)
2. Lever these shares into a total of 400K (300K loan using NAB equity builder)
3. Pay the dividends into the primary PPOR loan (loan A from bank)
4. Deduct interest from 100K split (stays at 100K for IO period) and 300K NAB loan (reduces over time) from tax return

Is this too "schemey"?

Any "non-advice" appreciated!

Ross