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Everything you need to know about the NAB Equity Builder

The NAB Equity Builder is a principle and interest (P&I) loan by the National Australia Bank (NAB) that allows you to borrow money to invest in Exchange Traded Funds (ETF’s) Listed Investment Companies (LIC’s) and Mutual Funds. 

If you’re apart of the FIRE community, you’ve probably heard of the NAB Equity Builder.

But what is it, and why should you care, you’ve always been able to borrow to invest in the share market, right?

Not like this.

The NAB Equity Builder is a unique product that isn’t offered by any other bank. The NAB Equity Builder is a principle and interest (P&I) loan that uses the shares you buy as security (not your house). 

There’s also no margin call. A margin call typically happens when the value of your investment decreases and you either need to place more funds into your account or sell off your investments. 

What I like about the NAB Equity Builder

The NAB Equity builder is a principle and interest loan. This means that over time, I’ll pay down the loan and I’ll own the asset outright.

I can start with a loan of $10,000 and increase this over time. With these funds, I can invest in over 950 approved equities including the popular ETF’s such as VAS, VGS and VTS or popular LIC’s such as AFI and MLT.

The loan term for the NAB Equity Builder is between 3 – 10 years with monthly repayments and the option to payout your loan early. The interest rate is variable and the current rate is 3.75% (With a 2% discount applied).

What to watch out for.

Like any investment, there is a risk. If I borrow money to invest, my returns can amplify, but so can my losses.

The NAB Equity Builder is also a variable loan, meaning that if interest rates go up, so will my repayments. If I miss a repayment, my investment may be sold by the lender.

I can only purchase off the approved investment list. If one of my investments is removed from the list, I will have to sell and this could trigger a capital gain event. 

If you would like to find out more on the NAB Equity Builder, you can read the product brochure.

The information contained in this article is for general information only and should not be taken as constituting professional advice. You should always do your own research when making any financial decisions and consider speaking to a licensed financial advisor.

Investing Discussion
Author: Investing Discussion

Founder of Investing Discussion Australia

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