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Using an EFM in conjunction with a traditional home loan, you can reduce your monthly loan repayments by up to 25% or more! The following example explains how...
A current home owner, Belinda, has already purchased a home and has a traditional home loan for $360,000. She is happy with her house, but would like to be able to afford such things as a private school education for her children or an occasional holiday.
By refinancing her traditional home loan and replacing it with an EFM combined with another normal home loan, Belinda can reduce her monthly repayments without extending the term of her loan and free up funds to do these things (subject to credit approval by an acceptable traditional home loan lender). Here's how: | Traditional Home Loan only | | | Property value: | $400,000 | | Traditional home loan (90% of property value): | $360,000 | | Lenders Mortgage Insurance premium: | $5,400 | | Monthly repayments: | $2,510 |
| Adding an EFM loan to reduce your regular repayments | | | Property value: | $400,000 | | EFM (20% of property value): | $80,000 | | Traditional home loan (70% of property value): | $280,000 | | Lenders Mortgage Insurance premium: | $3,560 | | Monthly repayments: | $1,952 |
Using an EFM may reduce your monthly repayments by up to 25% or more The illustration above shows that by using an EFM, Belinda can reduce her monthly home loan repayments by $558 per month! She has also significantly reduced the lenders mortgage insurance that she would otherwise have paid on the total loan package from $5,400 to $3,560. As we explained earlier, instead of charging a regular interest rate on the EFM, the lender is entitled to share in a minority of the capital gains on your property, as determined when you choose to repay the EFM.
We strongly recommend that you obtain independent legal and financial advice in relation to this EFM loan prior to entering into the EFM loan contract.
Please carefully read and review the EFM Disclosure Document available on this website or through one of our accredited lenders. This website does not take into account your personal objectives, financial situation, or particular needs. You should obtain a copy of the EFM Disclosure Document (available on this website) and the EFM Terms and Conditions Booklet from one of our accredited lenders and consider them before making a decision about whether to enter into an EFM.
Note: This example excludes application fees and other fees such as valuation fees, account keeping fees, transaction fees and lenders mortgage insurance (if applicable) as well as transaction costs associated with refinancing a home loan such as stamp duty, government fees, conveyancing fees and stamp duty on lenders mortgage insurance. For any additional assumptions used in calculating this example please refer to the assumptions page. |
Copyright 2008 Rismark International. All rights reserved. Fees, charges, terms, conditions and lending criteria apply. Full details are available on application. EFM loans have been developed by and will be provided by Rismark International Funds Management Ltd ABN 15 114 530 139 AFS licence number 293881 (trading as Rismark International) ('Rismark', 'we', 'us' or 'our'). EFM loans are offered in conjunction with certain traditional home loans offered by approved lenders and their originators. Rismark has appointed Adelaide Bank a division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFS licence number 237879 ('Adelaide Bank') as an approved lender Adelaide Bank and its originators ('Adelaide Bank originators') will distribute and manage EFM loans. Rismark has consented to Adelaide Bank and Adelaide Bank originators branding EFM loans as Adelaide Bank or Adelaide Bank originator-branded EFM loans. Rismark may over time also appoint other financial institutions to distribute and manage EFM loans. Rismark has appointed Permanent Custodians Limited ACN 001 426 384 ('Permanent') as lender of record, custodian and mortgagee for Rismark. This means Permanent will enter into the EFM loan contract and Mortgage on behalf of Rismark.(R) Equity Finance Mortgage (EFM) and EFM are registered trade marks of ARES Capital Management Pty Limited ABN 93 113 861 046. TM Equity Finance Mortgage is a pending trade mark of ARES Capital Management Pty Limited ABN 93 113 861 046. ARES Capital Management Pty Limited's ABN 93 113 861 046 intellectual property relating to the EFM product is protected by Australian Innovation Patent Numbers 2005100 871, 2005100 869, 2005100 868, 2005100 867, 2005100 865, 2005100 864, 2007100 445, and 2007100 448.
