Midkey offers flexible loans for homeowners accessing equity

In Short:
– Midkey is a non-bank lender that helps clients access home equity when traditional lending options are unavailable.
– Loans require no monthly repayments, with flexible terms based on specific borrower-triggered events.

Australian homeowners struggling to access their property wealth under traditional lending rules are being offered an alternative through non-bank lender Midkey.

The lender provides home equity loans with no monthly principal or interest repayments, with repayment triggered by agreed events such as a property sale, refinancing or inheritance.

Midkey targets borrowers who may be asset-rich but unable to qualify for additional lending, including self-employed business owners, semi-retirees and people navigating career or financial changes.

Its customers range from 35 to 91 years old, with an average age of 53.

The lender assesses serviceability at zero dollars per month for these loans and applies a 1 per cent buffer to existing debts, compared with the 3 per cent buffer used by traditional lenders.

Around 80% of its loans sit behind an existing home loan as a second mortgage.

Funds can be used to pay tax or business debts, finance renovations or reduce an existing mortgage to ease monthly repayment pressure.

Midkey charges simple interest rather than compounding interest, alongside a deferral fee linked to property value growth and the loan-to-value ratio.

The company says no deferral fee applies if the property’s value does not increase or declines.

The product is not designed to replace traditional lending, which generally offers lower rates.

Instead, it may suit borrowers who cannot access equity through a conventional refinance or top-up.

For brokers, the key is weighing the immediate cash flow benefits against the total cost of borrowing and the impact on the equity clients retain when the loan is repaid.