EQUITY ACCESS LOANS with MELBOURNE MORTGAGE FINANCE

This is a mortgage secured credit facility where an overall credit limit is approved by the lender and may be drawn down at any time for any purpose up to but not exceeding the approved limit.

These loans are usually taken by people who already own a home or have good equity.

For example, if you own a $400,000 property outright, you can usually arrange an Equity Access Loan (EAL) of up to $320,000 or 80% of the property value without arranging mortgage insurance. If you have a $100,000 home loan limit outstanding , your lender will be able to approve a separate Equity Access Loan for a limit of $220,000. Of course, approval will depend on your ability to prove sufficient income to qualify for the loan.

Equity Access Loans can be used in a variety of ways including:

• Purchasing a home

  This is not common as the interest rate on Equity Access Loans is generally higher than on normal home loans. It is also an “interest only” facility with no built-in structure to reduce the debt long-term.

• General or consumer purposes

  Interest rates on Equity Access Loans are much lower than personal loans or credit cards. Many borrowers establish an Equity Access Loan for the purchase of general non tax-deductable goods such as household items, travel, clearing other personal debt, purchase of vehicles etc.

• Investment purposes

  such as paying the 10% deposit on an investment property, or purchasing a property or shares. The Equity Access Loan must have a different account number to your normal home loan account so it can be operated separately for tax reasons.

• Business purposes

  if permitted by the lender. The Equity Access Loan must have a separate account number for tax reasons.