NAB Equity Builder - too good to be true?

Thanks!
Ahh yes I was aware of this, but I would consider that a forced method of savings. The positive cashflow on investment is the bit that has me most interested.

 

Would be good if they could offer products like this after a bear, not only after the bull has ran for some time. If everyone starts whipping the bull with leverage how long until it gets exhausted?

 

Agreed, it would be much better if the discounted interest rate was available at any time. But as they say ‘don’t time the market’.

 

Not wishing to be a pedant but your calculations are marginally out I think:



The error appears to be in the value of franking credits.

 

Perhaps work out the cash flow position and the taxable income position.

If cash flow is negative (but it may still be taxable income positive) it could, temporarily, be debt recycling in reverse.

 

I'm not sure if this comment was directed at my previous comments, but I'm not sure I follow what you are getting at.

 

Yes

Say, for example,
$45,000 in income
$40,000 in interest
------
$5,000 net income
so the shares are positively geared.

But the repayments on the loan may be say $50,000
This means you would have to pay out $50,000 in cash but get $45,000 in income. Cash flow would be negative by $5,000

This has to come from somewhere so it means $5,000 diverted from the payment of your main residence loan.

I am just making these figures up though. It may not be this bad.

 

Ahh thanks I see what you are saying. I'm looking at investing purely using my current share portfolio as security as I don't own any property. Might be a useful point for others though.

 

As far as I understand, once you have the facility setup you don't actually have execute a purchase and you'll still get the 2% discount applied whenever you do execute.

I've just been approved, but will be using for dry powder if a bear market turns up.

 

Nice, so you've got the loan approved but haven't used the loan funds. Does this mean you've already paid the deposit? Suppose your loan is approved for 100k but you've initially drawn down the minimum 10k, are you required to pay deposit for the entire 100k or can you just pay the deposit for the 10k drawn. What's the maximum time you can go without using the entire loan?

Apologies for the stupid questions in advance

 

Good questions. I had the same ones and was hard to get direct answers. It appears you only need to transfer deposit on instruction to purhaese purchase.

 

@jprops just wondering roughly how long did it take to get approval?

 

1 week

 

I emailed NAB to find out when VDHG etc would be included on the Approved Investment list, it looks like they are looking to add it to the list when they review it in February. Very happy to hear this!

 

Thanks OP for starting this thread, good read...

How are you guys going with this product...

 

Facility loaded, powder dry

 

I'm wondering how much I should apply for, I don't want to apply for too much and have the application rejected due to not having enough serviceability. How did you go about deciding this, was it an issue at all?

 

Given max LVR 70%, how much would you like to put down in the next 12 months?

Edit: not saying I intend to go 70%, but just an example of how I thought about it. Can always increase the loan in another 12 months.

 

Are you going to the PC meet up this evening?

 

Nope will definitely try to make the next one, would be great to meet all these very clever people and put a few faces to usernames!!