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Borrow to invest NAB Equity Builder

Borrowing to invest without the risk of a margin call

There are many ways to grow your wealth.

Most people are familiar with borrowing money to invest in property, but what most people don’t know is that you can also borrow to invest in non-property assets. By borrowing to invest in assets like shares and managed funds, you’ll be able to access a range of opportunities from around the world and possibly grow your small investment into a profitable portfolio.

With interest rates at an all-time low, borrowing may be a cost effective strategy for investors looking to increase their exposure to other investment options.

 

Introducing NAB Equity Builder

NAB Equity Builder is an award winning solution that allows you to borrow to invest in managed investments without the risk of a margin call. 

  • Principal and interest loan – similar to a home loan, NAB Equity Builder is a principal and interest loan. It allows you to repay the loan over a set period of time while increasing your exposure to diversified investments
  • Security – instead of using your home as security, the managed investments bought as part of Equity Builder are held as the loan security
  • Flexibility – choose your preferred loan term and repayment style
  • Diversity – access a broad range of managed investments

You can benefit from investing in liquid assets and borrowing to invest can be part of a long term strategy to build wealth over time. Just imagine, at the end of the investment loan you may have an asset that could help you achieve your goals. 

An investment loan isn’t for everyone. Make sure you consider the risks when deciding whether this strategy is right for you. 

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NAB Equity Builder interest rate

Variable rate p.a. Special rate^
6.95% 4.95%

Standard variable rate effective from 18 April 2017.

^ See Important Information below for more details

How to apply

1. Read and ensure you understand the:

2. Complete the application form

3. Lodge security or cash against your loan

4. Complete an order to purchase an investment with your loan

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Visit the Equity Lending website for more information on NAB Equity Builder’s benefits and risks, case studies and investment calculator.

Benefits

Greater control

NAB Equity Builder allows you to customise each loan program to suit your particular investment goals. You can select your preferred investments, starting loan amount, style of principal repayment, and time frame to repay the loan. 

 

Greater stability

Instead of using your home as security, the managed investments bought/contributed will be held as the loan security. As there are no margin calls, price movements of the security supporting the loan won’t trigger the need for any corrective action (ie the acceleration of loan repayments, or the sale of loan security); regardless of the value of the outstanding loan. 

 

Increasing loans and diversity

Borrowing to invest can increase the return on your funds, when the investment outperforms the cost of borrowing. It can also allow you to increase your exposure to a preferred investment theme.

 

Lower borrowing costs

As the NAB Equity Builder loan program requires the consistent repayment of loan principal, the loan balance used to calculate loan interest is constantly decreasing.

Risks

Investments may be sold

Monthly repayments must be made consistently. If a repayment is missed a portion of the loan assets (the investments used to secure the loan) may be sold to correct the position or repay the loan. For example, if you miss a repayment of $100, then $100 worth of investments may be sold to correct the position. This may have capital gains tax consequences.

 

Increasing interest rates

Increases in interest rates may result in your monthly loan interest payments (in combination with your monthly principal repayment obligation) being greater than you budgeted for.

 

Changes to approved investment lists

This may create the need to switch into a new approved investment. The sale of an existing investment may trigger CGT consequences.

 

Falling interest rates

This may place a greater burden on your other sources of available cash.

 

nabtrade and NAB Equity Builder

Security

You may be able to use an investment you hold in nabtrade as security against a NAB Equity Builder loan.

NAB Equity Builder lends against 21 listed ETFs and 3 LICs.

Check the approved investment list to see if your investments are on the list. 

nabtrade Total Wealth

Add NAB Equity Builder investments into nabtrade Total Wealth as an off-platform asset and view it alongside your existing portfolio.

If what you invest in is listed, you’ll also have this priced for you in real time.

NAB internet banking

If you’re a NAB customer, you’ll be able to see everything within Internet Banking.

 View your equity loan balance alongside your banking.

Related content

Unlocking wealth opportunities and NAB Equity Builder case study: Chloe

 

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How a professional adviser uses NAB Equity Builder for his clients

 

Find out more about the benefits of margin lending