Loan to leverage home equity

The National Australia Bank (NAB) has released a lending product designed to allow borrowers to use equity, typically in their home, to create additional income streams through other investments.

NAB private banker Klaudia Vulic said the National Portfolio Facility offered a flexible line of credit, for one annual fee of $550, and provided clients with access to personal and investment funds across multiple accounts linked under the same umbrella.

Vulic said one advantage of the product was that it helped simplify record keeping by consolidating debt, including loans on a primary home, credit card debt, margin loans and loans on investment properties for example, in the one product.

She said this allowed the client to offset more than one savings account against their lending to reduce non tax-deductible debt interest expenses, and also helped simplify tax records by separating the client’s deductible and non tax-deductible interest and expenses.

Vulic said the product was aimed at borrowers who had a household income of over $100,000 and wished to use their savings, equity and borrowing capacity to grow their wealth while reducing their personal debt.

She said in the two months since she was first able to introduce the product to her clients, she had written more than two dozen of the accounts, which were typically valued at over $1 million each.

NAB executive general manager of business and private banking George Frazis said the product was primarily intended for NAB’s private banking and business banking clients, but would also be extended to retail customers with complex financial needs.

He said it would be offered to clients as part of a wider package called the Portfolio Package.

“There is a large market of people aged 30 to 55 who have significant income and equity in their properties, who could better leverage their cash flow and equity by investing to grow their wealth faster,” Frazis said.