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Equity Finance Mortgage

Discussion in 'Finance & Banking' started by Muzza, 14th May, 2007.

  1. Muzza

    Muzza Active Member

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    Has anyone ready much into these new products that give you a 20% deposit without having to make repayments? The downside that i can see is that you have to give up half of your capital gain but is there any reason why you couldnt use this product for high return purchases to achieve neutrally or positvely cash flowed investment properties?
     
  2. bigtree

    bigtree New Member

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    The only Equity Finance product i have seen is PPOR only .. ie: No Investment properties and only in certain postcodes.
     
  3. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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  4. Muzza

    Muzza Active Member

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    Wow, gets a bit of a bagging...

    Was hoping it might be available for investment - with the view of being able to neutrally gear new purchases using the EFM.... Would not matter to me that they take some of the capital gain if I could buy 10 IP's without paying any ongoings!!!! :D
     
  5. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    So you'd be willing to give away potentially tens, even hundreds of thousands of dollars in the long term to save a few thousand in the short term?

    Mark
     
  6. Jacque

    Jacque Team InvestEd

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    I can see this type of product as being potentially harmful, in that increased interest in and use of this type of loan may artificially stimulate the first home buyer market and cause uneccessary price hikes.

    Surely there must be better ways for borrowers to gain funds (thinking using parents equity, short term borrowings etc) rather than sacrificing so much of their tax free capital gain.
     
  7. grossrealisation

    grossrealisation Active Member

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    hi all
    not a great lover of the efm product.
    what would your views here be to a fund/product/or organisation that did the same as efm but the 20% was given by individual investors/fund/product and by supplying the 20% in the form of equity they were second mortagees behind the major lender and that lender can be someone you or they organise.
    and for investment only no ppor.
    and the investment must be revalued each 5 years and the second can get paid out or continue depending what the two entities agree on.
    so a true jv
    the jv partner only supplies the 20% resi or 30% comm and you carry the who of the responsabilty for the debt to both the major and the second.
    there is no interest for the 5 years ( as this is equity lending) and at 5 years the 20% plus a fixed price is paid out ( what ever that is)(and you can put here what you think that should be) and and the second can stay if its a good investment or bailout for a portion of the increase.
    a return can be agreed at the start if the market turns.
    lets play with a few views on this type of product.
    I have had a look at it for a little while and I think there is a market for it.
    its just what form it would take.