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Consumer - Property Finance - Equity Release Loans
An Equity Finance Mortgage (EFM) is a new type of home loan that can help you to:
- Reduce the upfront and ongoing costs of purchasing a new property; or
- Reduce your current monthly mortgage repayments (via a refinancing of your existing loan); or
- Buy a more expensive property than you may otherwise be able to afford.
An EFM works in conjunction with a traditional home loan. Together they let you move some of the expense of a traditional home loan to later when you eventually sell your property. Here's how:
- An EFM allows you to borrow up to 20% of a property's value;
- There is no annual percentage rate applicable to an EFM loan, unless you are in default;
- You are not required to make any regular monthly interest repayments throughout the EFM loan, which you can hold for 25 years.
Instead, when you sell the property or repay the EFM for some other reason, you repay the EFM amount you originally borrowed plus up to a 40% share of any increase in the value of the property.
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