In an Australian first, NAB is announcing the official roll-out of NAB Equity Builder, a principal and interest (P&I) lending facility, which allows approved investors to use one or more P&I loans to acquire managed investments without the uncertainty of margin calls.
The NAB Equity Builder took home a 2016 Canstar Award for Innovation Excellence this year, with Canstar commenting that the product is “one-of-a-kind in Australia, and would potentially meet a need for investors that want to use their investments as security for a loan but want to avoid the risk of a margin call.”
Unlike a traditional margin loan, where investors are not required to repay their loan in a specified timeframe, NAB Equity Builder allows investors to borrow funds when they agree to a regular P&I loan repayment schedule. . Each P&I loan will be secured by approved investments; typically unlisted managed funds or exchange traded funds (ETFs).
NAB’s Head of Investment Lending, Adrian Hanley, said that the product will provide customers with greater control, stability and certainty over their investment planning.
“This is all about providing customers with a disciplined way to invest in the share market, through a loan they will progressively repay,” he said.
“NAB Equity Builder customers can select their preferred investments, starting loan amount, style of principal repayment, and time frame to repay the loan.
“This gives certainty to customers who can consistently reduce their loan balance and gearing risk over time, providing a more predictable financial outcome.”
The NAB Equity Builder will appeal to investors who:
(1) want to invest without the uncertainty of margin calls,
(2) want to own their investment assets outright at the end of the loan term, and
(3) would prefer not to use their home equity to finance their investments.
Investors can operate multiple P&I investment loans at once, with up to 800 managed funds or ETFs to choose from.
Canstar applauded NAB for their innovative product development, explaining;
“We heartily congratulate NAB for facilitating this type of P&I investment loan, secured by managed funds and ETFs.”
