Midkey home loan review: Is Midkey home loan legit or scam?

Midkey home loan review: Is Midkey home loan legit or scam?

If you are a homeowner who wants to access some of the equity in your property without making monthly payments, you might have heard of Midkey, a new home loan product that claims to offer a revolutionary solution. But is Midkey home loan legit or scam? In this blog post, we will review Midkey home loan, how it works, what customers are saying, and the benefits and drawbacks of this product.

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Midkey home loan review

Overview of Midkey home loan

Midkey is a home loan product that allows borrowers to defer the repayment of the principal, interest, and a deferral fee until the end of the loan term, which can be up to 30 years. The loan can be used as a first or second mortgage, and the amount that can be borrowed depends on the value and equity of the property. Midkey does not require income verification or monthly payments, and charges simple interest (not compound interest) on the loan amount.

Midkey was launched in May 2023 by two former bankers, Richard Young and Scott Collison, who saw a gap in the market for mid-life Australians who have plenty of equity in their homes but lack the income to service another loan. Midkey has the approval of the Australian Securities and Investment Commission (ASIC) and is backed by institutional investors.

How does Midkey home loan work?

To apply for a Midkey home loan, you need to own a residential property in Australia and have at least 20% equity in it. You can borrow up to 35% of the property’s value if you do not have an existing mortgage, or up to 30% if you have a traditional mortgage, as long as the total loan-to-value ratio (LVR) does not exceed 80%. You can use the loan proceeds for any purpose, such as renovating your home, investing in another property, paying off other debts, or funding your lifestyle.

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The loan term can be up to 30 years, or shorter if you sell your property, pass away, or agree to repay the loan earlier. At the end of the loan term, you need to repay the loan amount, the simple interest, and the deferral fee. The deferral fee is a percentage of the increase in your property’s value during the loan term, and it is calculated based on the ratio of your Midkey loan amount to your property’s value at the start of the loan. For example, if you borrow $200,000 from Midkey on a property worth $1 million, your ratio is 20%. If your property’s value increases to $1.2 million at the end of the loan term, your deferral fee is 20% of the $200,000 increase, which is $40,000. If your property’s value does not increase or decreases, you do not pay any deferral fee.

Midkey home loan review

Midkey home loan is a unique and innovative product that offers some benefits for homeowners who want to access their equity without affecting their cash flow or income. Some of the benefits are:

  • No monthly payments: You do not have to worry about making regular repayments or budgeting for your loan. You only pay at the end of the loan term, which gives you more flexibility and control over your finances.
  • No income verification: You do not have to provide proof of income or meet any income criteria to qualify for a Midkey loan. This can be helpful if you are self-employed, retired, or have irregular income.
  • Simple interest: You only pay simple interest on the loan amount, not compound interest. This means that the interest does not accumulate over time, and you pay less interest overall compared to a traditional loan.
  • Equity sharing: You share a portion of the increase in your property’s value with Midkey, which can be seen as a fair trade-off for not making monthly payments. If your property’s value does not increase or decreases, you do not pay any deferral fee, which can be a bonus.
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However, Midkey home loan also has some drawbacks that you need to be aware of before applying. Some of the drawbacks are:

  • Higher interest rate: The interest rate on a Midkey loan is higher than the average interest rate on a traditional loan, which reflects the risk and cost of providing a deferred payment loan. The current interest rate on a Midkey loan is 7.35% p.a., which is about 3% higher than the average variable rate on a standard home loan.
  • Additional fees: Besides the interest and the deferral fee, you also have to pay an establishment fee of 1.5% of the loan amount, and incidental fees for loan processing and valuation. There are no ongoing fees, but you may incur fees for early repayment or default.
  • Reduced equity: By taking out a Midkey loan, you reduce the amount of equity you have in your property, which can affect your future borrowing capacity, refinancing options, or retirement plans. You also give up some of the potential capital gains on your property, which can be significant in a rising market.
  • Uncertainty: The amount you have to repay at the end of the loan term depends on the value of your property at that time, which can be unpredictable and volatile. You may end up paying more than you expected, or have difficulty repaying the loan if your property’s value drops or your financial situation changes.

Is Midkey home loan legit or scam?

Midkey home loan is a legit product that has been approved by ASIC and is backed by reputable investors. It is not a scam or a fraud, but a new and innovative way of accessing your home equity. However, it is not a suitable product for everyone, and you need to understand the risks and costs involved before applying. You should also compare Midkey with other home loan products and alternatives, and seek independent financial advice if you are unsure.

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What customers are saying

Midkey home loan is a relatively new product, and there are not many customer reviews or testimonials available online. However, based on the information on the Midkey website, some of the customers who have applied for a Midkey loan are:

  • George, an electrician who wants to start his own business and needs additional funding
  • Preetie and Mohan, who have had a cost blowout on their renovations and need more cash to complete them
  • Jessie and Hoi, who want to send their children to private school and need to reduce their monthly mortgage payments
  • Dale, who recently divorced and needs to buy a new home while keeping the family home for his children
  • Tammy, who wants to pay for her father’s expensive medical treatment

According to the Midkey website, these customers are happy with the Midkey loan and how it has helped them achieve their financial goals.

Benefits of Midkey home loan

Some of the benefits of Midkey home loan are:

  • No monthly payments: You do not have to worry about making regular repayments or budgeting for your loan. You only pay at the end of the loan term, which

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