NAB Equity Builder

It’s an investment loan where each payment reduces the principal (the amount you initially borrowed) as well as covering the interest. Once you pay off the loan in full, the assets are 100% yours.

NAB Equity Builder is just like a home loan, but for financial assets instead of property.

Once approved, you can choose from over 950+ approved investments. You can opt to:

• acquire investments all at once
• wait for the right opportunity
• break it up into a number of smaller investments over time.

When you (or your adviser) have decided on your investments, we’ll purchase the investments on your behalf. As it’s a principal and interest loan, all you need to do is meet the monthly repayments over a set period of time. Once your loan is paid in full, the financial assets are all yours.

Traditional margin loans also allow you to borrow to invest for any business or investment purpose, with the shares held as the loan security.

As share prices can fluctuate, there’s a risk that the shares might fall in value. If the value of your investments falls to a point where your loan exceeds the maximum loan value ratio (LVR), you’ll receive a margin call. This could involve:

• making a lump sum payment
• selling part of your investment
• providing extra security (e.g. security over other shares).

If you do not take one of the required actions, the lender can sell your shares to meet the margin call.

With NAB Equity Builder, the loan is set up as principal and interest. This means you have a disciplined repayment plan built in. It’s a lending solution with no margin calls, making things easier on both your budget and your peace of mind. This loan type allows you to stick to your plan, without short term market volatility impacting on your long term investment goals.

More specifically, should you borrow to invest in managed investments? If you’re comfortable with borrowing money to invest in financial assets, then NAB Equity Builder could allow you to contribute a larger amount on day one. If your investments perform well the effect of compound returns is much stronger, which could lead to better investment results in the long term.

However, investors who borrow should be comfortable with the risk they’re taking. It’s important to understand that gearing magnifies both the potential for gains and losses in assets, which can both increase and decrease in value. Even with the repayment of your principal over the loan term, losses will be magnified in the event of a market downturn, or asset devaluations.