Product Guide

A quick overview of Midkey

Frequently asked questions

Take a look at the most commonly asked questions.

What is a Midkey “No Monthly Payments" Loan?

A Midkey “No Monthly Payments” Home Loan(called a “Midkey”) is different from any other kind of home loan or mortgage in Australia. Our borrowers do not make any regular, monthly payments. Instead, at the end of the loan, they pay the loan amount and simple interest (not compound interest), plus a new innovative Midkey Deferral Fee. There is no fixed timeframe for repayment. However, you must repay when you sell your home, or if you die, or at other specific events agreed upfront. The Midkey DeferralFee is a proportion of any increase in your home’s value so, for example, if at the start of your loan your Midkey home loan is 10% of your home’s value, then your Midkey Deferral Fee will be 10% of any increase in your property’s value at the end of the loan, if your Midkey home loan is 20% of your home’s value, your Midkey Deferral Fee will be 20% of any increase in its value at the end of the loan. If the value of your home does not increase, you do not have to pay a Midkey Deferral Fee.

^{We provide first and second mortgages - if you already have a mortgage over your home your Midkey home loan can be secured by a second mortgage.}

How do I qualify for a Midkey “No Monthly Payments” Loan?

To qualify for a Midkey “No Monthly Payments” Loan:

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your property, or the one you intend to buy, needs to be a non-strata residence located in a state capital or a major population centre. We are coming to NT and VIC soon (join our Waitlist below);
you need to have at least 20% useable home equity (the amount by which your home’s value exceeds the amount of your existing home loan).

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Example: Let’s say Emma’s house is currently valued at $2m, and she owes $1,600,000 on her bank first mortgage. This means Emma has $400,000 of useable home equity (i.e. 20% of her home’s value). She would only be eligible for a Midkey home loan if she agreed to use the Midkey proceeds to pay off her bank first mortgage. However, if she has already paid off more of her bank first mortgage owing $1,500,000, her useable home equity is now $500,000 (25% of her home’s value). In this scenario, Midkey may be able to lend her $100,000.

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if you would like your Midkey home loan secured by a second mortgage, your first mortgage home loan needs to be a traditional "principal plus interest" home loan. Also, Midkey requires a priority agreement with your first mortgage home loan provider. Midkey will work with you to arrange this priority agreement, or you are welcome to refinance your first mortgage home loan with a Midkey Partner Lender where Midkey already has a priority agreement.
you need to be an Australian citizen over the age of 18; and
your application needs to be approved by us.

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We will soon provide Midkey "no monthly payments" home loans for properties located in more Australian cities. You are welcome to join our Waitlist so we can let you know when we start providing Midkey home loans in additional cities.

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Click here to join our Waitlist

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How much can I borrow using a “No Monthly Payments” Loan?

A Midkey loan can be a minimum of:

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$100,000

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For owner-occupier houses:

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Up to 35% of your property’s current value for a first mortgage (i.e., you don’t have or plan to have a traditional mortgage), or
Up to 30% of your property’s current value for a second mortgage (you have or will have a traditional mortgage on your home).
The Loan to Value Ratio for your property cannot exceed 80% (including the first mortgage if your Midkey loan is a second mortgage).

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For investment houses:

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Up to 35% of your property’s current value for a first mortgage (i.e., you don’t have or plan to have a traditional mortgage), or
Up to 30% of your property’s current value for a second mortgage (you have or will have a traditional mortgage on your home).
he Loan to Value Ratio for your property cannot exceed 75% (including the first mortgage if your Midkey loan is a second mortgage).

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For apartments:

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Up to 33% of your property’s current value for a first mortgage (i.e., you don’t have or plan to have a traditional mortgage), or
Up to 28% of your property’s current value for a second mortgage (you have or will have a traditional mortgage on your home).
The Loan to Value Ratio for your property cannot exceed 75% (including the first mortgage if your Midkey loan is a second mortgage).

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What do I pay at the end of a Midkey?

At the end of a Midkey "no monthly payments" home loan, you will pay Midkey:

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the original (or “principal”) loan amount.
the simple interest that has accumulated. Simple interest does not compound, so, for example, the interest that has accumulated this year is not charged interest next year. The simple interest rate is roughly 1% to 2% higher than a traditional home loan. Midkey charges variable simple interest that is a 3.25% premium to the RBA Cash Rate for owner-occupier houses, 3.75% premium for investment houses, and 4.25% premium for apartments.

the Midkey Deferral Fee, our new, innovative fee is a proportion of any increase in your home’s value so, for example, if your loan is 10% or 20% of your home’s current value, the Midkey Deferral Fee will be 10% or 20% of the increase in its value at the time you repay (no increase, no Midkey Deferral Fee).
Incidental fees that are charged at cost – a discharge fee (approximately $500) and, in some instances, a valuation fee.

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At the beginning of your Midkey loan, you must pay an establishment fee 1.5% of the loan amount with a minimum of $3,000, valuation fee (see FAQ), document preparation costs and out-of-pocket expenses (approx. $450), registration fee (approx. $187 depending on the State), settlement rescheduling fee (approx. $200, if there is a change after once agreed). You can choose to have these fees (except the valuation fee) deducted from the amount of your Midkey loan.

How is a Midkey “No Monthly Payments” Loan different from a traditional home loan?

The main differences are:

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Timing of payments: A traditional home loan typically requires principal and interest payments on a monthly basis. In contrast, with a Midkey loan, there are no regular, monthly payments, as they are paid at the end of the loan.

Assessment flexibility: Traditional lenders are more sensitive to your ability to service their debt. They are required to assess your income, expenses, and assets to determine your ability to make regular payments. Although Midkey assesses similar criteria, we don’t need to determine your ability to make regular, monthly payments on our loans.

Unlocking home equity: Due to our assessment flexibility, even if you can’t meet the serviceability requirements of a traditional lender, you may still be able to unlock the useable equity in your home with a Midkey loan to increase your borrowing capacity.
Reduce your monthly debt payments: If you want to reduce your monthly debt payments, you can use a Midkey loan to decrease the amount of your traditional home loan.
Simple interest: A Midkey home loan charges simple interest (not compound interest). Simple interest does not compound, i.e. the interest that is accumulated this year is not charged interest next year. The simple interest rate is roughly 1% to 2% higher than a traditional home loan.
Repayment date: A traditional home loan typically specifies a date by which you must repay your loan, whereas a Midkey doesn’t. A Midkey loan is only repayable on certain events, like if you sell your property or you decide you want to repay.
Innovative fee: It has a new, innovative Midkey Deferral Fee that is a proportion of any increase in your home’s value, where the agreed proportion is your Midkey loan amount to your home’s value at the start of your loan. For example, if your Midkey loan is 10% of your home’s value at the start of the loan, your Midkey Deferral Fee at the end of the loan will be 10% of any increase in your property's value; if your Midkey loan at the start is 20% of your home’s value, then your fee will be 20% of any increase in its value at the end of the loan. If your property does not go up in value or, in fact it decreases, you will not pay the Midkey Deferral Fee.

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Note: There are other differences, such as the amount of the establishment fee, transaction-related costs (e.g. valuation fees, documentation preparation costs and out-of-pocket expenses), a settlement rescheduling fee, and eligibility criteria.

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If I have a Midkey “No Monthly Payments” Loan, who owns my home?

You do. In terms of property ownership, and your use of your home, a Midkey “No Monthly Payments” Home Loan operates in a similar way to a traditional home loan.

Is Midkey a bank?

No. Midkey is not a bank. We specialise in Midkey “No Monthly Payments” Home Loans for homeowners and would-be homeowners. We don’t offer bank accounts, credit cards or other products that banks typically do.

What is a Midkey Deferral Fee?

Think of the Midkey Deferral Fee as "the fee you pay for the benefit of deferring all your principal and interest payments to the end of your Midkey home loan”. Importantly, you are only charged a Midkey Deferral Fee if your property increases in value

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The Midkey Deferral Fee is a proportion of any increase in your home’s value during the term of your Midkey "No Monthly Payments" Home Loan. The proportion is calculated by dividing your Midkey home loan amount by your home’s value, and the proportion is agreed at the start of your Midkey loan. The more your property increases in value, the larger the Midkey Deferral Fee will be at the end of your home loan.
For example, if your Midkey home loan is 10% of your home’s value at the start of the loan, your Midkey Deferral Fee at the end of the loan will be 10% of any increase in your property's value; if your Midkey home loan at the start is 20% of your home’s value, then your Midkey Deferral Fee will be 20% of any increase in its value at the end of the loan. If your property’s value does not increase (or it decreases) during the term of your Midkey home loan, you won’t need to pay us a Midkey Deferral Fee. No property value increase means no Midkey Deferral Fee. But, for your sake and ours, we hope the value of your property appreciates through the roof, so we can all celebrate at the end. We love a win/win arrangement, and we hope you do too.

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