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It would be very interesting to read what materials Rismark gives the investors of the EFM. What sort of actuarial calculations would you have to make to arrive at a return? Granted even with normal mortgaged-backed securities you have refinancing risk, but this is even less certain. You would...

If you use the EFM to buy an IP, you're pulling your future borrowing power to now. Great when the market goes up, of course (best if your IP goes up and the PPOR doesn't). However, when you refinance (as you no doubt will have to if you plan on buying more) the CG share means a bigger kick than...

Sounds pretty solid. Like many products the EFM can be beneficial and help people achieve their goals if it is used correctly and with discipline. Used incorrectly…… This product will be most useful, IMHO, if: • You don’t intend to make renovations or improvements • You have the discipline...

PT Bear, your example is one of the few situations where this loan would be beneficial while minimising the issues such as what happens to improvements that have been discussed on this thread. Basically, the best way to use this loan would be to treat it like a high-interest, no-doc loan and aim...

Going slightly off topic, but just because I own property (with much of my wealth tied to property) doesn't mean I support every product or initiative or govt program that increases property prices. I for one would rather have normal property increases based on inflation, income growth and...

Would I be right in thinking that the brokers have largely stayed away because any comments by brokers (however objective) supporting the product might be construed as promotion and any negative comments (again, however objective) would be construed as sour grapes because they don't have access...

The fact is, though, Simonjulie, while credit cards have become mainstream (as much as 90% LVR loans have become mainstream), they ARE causing problems. Combined with modern materialism credit cards are causing financial problems for a lot of people. I can only see a use for this product as a...

An interesting point. The bank is losing money on the 20% loan (since they don't get interest but they still have to fund it from somewhere). The longer the loan goes for, the costier it is. What's to stop them from just denying all applications for renovations (in an extreme case) and get all...

You're right. I disagree that people should just keep piling on debt (especially one with such an uncertain payment at the end) just because the product is there. Hobo-jo, have you thought about why the heck I should be opposing this product? If anything, I should be cheering for it. I've been...

A buyer who needs this type loan to get into the market has no business buying a new or close to new home, surely? Certainly not the first home buyer who really should buy an older, cheaper home and work their way up. An older home in the same suburb could very well be 10-20% cheaper than a new...

Hobo-jo, do you think there is a genuine risk (given what most people are like) that the many improvements a homeowner will make to a property ends up in the hands of the bank when the property is sold? e.g. an improvement of $5,000 yields an increase of $10,000 in value. If I don't do the...

I take a completely different view. I think people who use this product and live in the property long term without refinancing it are the people who will end up hating it the most. Can you imagine all the things that an ordinary homeowner does to improve their property over 20 years? Can you...

Yes, but personally, I can't time the market that well. When markets move, they MOVE. This product will be aimed at ordinary 'battlers' who want a leg on the ladder. How astute do you think they will be? One way to use the Equity Finance Mortgage is to treat it as a high interest loan, get...

Why bother buying if you expect the market to be flat? Rent at 4% of the purchase price and put the rest of the money into the sharemarket instead. Just wait 5 years and buy then. If I could time markets that well I would be sitting on my island. Alex

I think it's a complex product with many conditions that an ordinary PPOR buyer (which this product is aimed at) won't understand. How many people will realise that you'll need their approval to paint, do renos, etc, especially when it's such a departure from ordinary financing? Progressive...

You're thinking like a property investor, Gross. Most people don't. They'll just be thinking 'I spent $x out of my hard earned, highly taxed dollars on this pool. Why should the lender get a portion of that even though they didn't do anything?' Alex

Human nature being what it is, I think people will use this to buy a more expensive house than they could previously afford. Like most PPOR owners they will add things and renovate the house. Then a few years down the line, they will upgrade, and get into a holy dispute with the lenders on what...