Midkey – Pay Off Other Debt

A Midkey No Monthly Payments Loan (called a “Midkey loan”) 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 repayment timeframe, but the loan must be repaid when you sell your home, move into aged care, die, or at other specific events agreed upfront.

The Midkey Deferral Fee is the fee you pay for the benefit of deferring all your principal and interest payments to the end of your Midkey home loan. It's a proportion of the increase in your home's value above the agreed initial value** over the loan term. The proportion is calculated by dividing your Midkey loan amount by your home's agreed initial value at the start of the loan. We refer to this proportion as the deferred payments percentage.

Making partial repayments during your Midkey loan term will reduce the deferred payments percentage that determines your Midkey Deferral Fee. If no partial repayments are made, the original deferred payments percentage (agreed at the start of your loan) will stay the same.

How the Midkey Deferral Fee works:

If your loan is 10% of your home's agreed initial value, you pay 10% of any increase in your home's value above the agreed initial value** over the loan term.
If your loan is 20% of your home's agreed initial value, you pay 20% of any increase in your home's value above the agreed initial value** over the loan term.

You only pay the Midkey Deferral Fee if your home’s agreed initial value increases. If it doesn't increase or it decreases, you don't pay a Midkey Deferral Fee.

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

*Other fees, like establishment, valuation, settlement, documentation, discharge, processing, and other incidental fees, are also payable.

**This is the agreed initial value of your home after Midkey has applied a 5% reduction to your home’s initial independent valuation.

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At the end of your Midkey No Monthly Payments Loan – typically when you sell your home or choose to repay – you’ll pay:

The original loan amount (principal): This is the amount you borrowed at the start of your Midkey loan.
Simple interest that has accumulated on your loan amount. Midkey charges simple interest (not compounding), which means interest is calculated only on your original loan amount – not on any interest that’s already accrued. For example, interest that builds up this year won’t generate more interest next year.

The rate is typically 1-2% higher than a traditional home loan, but lower than reverse mortgage or typical second mortgage rates.
It’s a variable rate, linked to the Reserve Bank of Australia’s cash rate:
- Owner-occupiers: RBA + 3.25%
- Investment houses: RBA + 3.75%
- Apartments: RBA + 4.25%

The Midkey Deferral Fee: This is a proportion of any increase in the agreed initial value* of your home during the loan term. The proportion is agreed upfront and calculated by dividing your Midkey loan amount by your home’s agreed initial value. We refer to this proportion as the deferred payments percentage.

Making partial repayments during your Midkey loan term will reduce the deferred payments percentage that determines your Midkey Deferral Fee. If no partial repayments are made, the original deferred payments percentage (agreed at the start of your loan) will stay the same.

Below are two examples of how a Midkey Deferral Fee is calculated:

If, at the start of your Midkey loan, the amount of your Midkey loan was 10% of your home’s agreed initial value, your Midkey Deferral Fee will be 10% of any increase in your home’s value over the agreed initial value during the term of your loan.
If, at the start of your Midkey loan, the amount of your Midkey loan was 20% of your home’s agreed initial value, your Midkey Deferral Fee will be 20% of any increase in your home’s value over the agreed initial value during the term of your loan.

If, at the end of your Midkey loan, the agreed initial value of your home has not increased or has decreased, you will not pay a Midkey Deferral Fee.

*For every Midkey loan, we apply a minimum 5% reduction to your home’s initial independent valuation. This adjusted figure is called the agreed initial value. We apply this reduction because the economics of Midkey’s No Monthly Payments Loan are designed primarily for long-term borrowers. However, we understand that some borrowers may need short-term solutions too. By using the agreed initial value, Midkey can responsibly offer loans to both short-term and long-term borrowers – while keeping our model fair and sustainable for everyone.

Valuation fee (if required)

A final independent valuation may be needed. This fee is paid directly to an independent valuer, typically $300-$3,850 (quotes required for homes valued over $10 million)

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Discharge fee: Approximately $500

Note: There are no regular or monthly fees charged during the term of your Midkey loan. However, if certain events occur during the term of your loan (for example, if you want to make a partial repayment of your Midkey loan or you need to make a partial repayment because the loan to value ratio that applies to your home is greater than 100%), you may need to pay some additional fees (like partial repayment fees, valuation fees, processing fees, third party fees, and other incidental fees).

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The main differences are:

Timing of payments: Traditional home loans require principal and interest payments monthly. Midkey loans have no regular monthly payments; all principal and interest can be repaid at the end of the loan.

Assessment flexibility: Traditional lenders assess your ability to make regular loan repayments by reviewing your income, expenses, and assets. While Midkey considers similar factors for any of your priority debts, we don’t require you to prove your ability to make regular or monthly repayments on our loans.

Unlocking home equity: Due to our assessment flexibility, even if you don’t meet traditional serviceability criteria, you may still qualify for a Midkey loan and unlock your usable home equity 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 loan charges simple interest (not compound interest). Simple interest means that interest is calculated only on the original loan amount, not on accumulated interest. Our 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 loan is only repayable on certain events, like if you sell your home, you decide you want to repay, move into aged care, or you die.
Innovative Deferral Fee: The Midkey loan has a new, innovative Midkey Deferral Fee that is a proportion of any increase in the agreed initial value* of your home during the loan term. The proportion is agreed upfront and calculated by dividing your Midkey loan amount by your home’s agreed initial value. We refer to this proportion as the deferred payments percentage.

Below are two Midkey Deferral Fee examples:

If, at the start of your Midkey loan, the amount of your Midkey loan was 10% of your home’s agreed initial value, your Midkey Deferral Fee will be 10% of any increase in your home’s value over the agreed initial value during the term of your loan.
If at the start of your Midkey loan, the amount of your Midkey loan was 20% of your home’s agreed initial value, your Midkey Deferral Fee will be 20% of any increase in your home’s value over the agreed initial value during the term of your loan.

If, at the end of your Midkey loan, the agreed initial value of your home has not increased or has decreased, you will not pay a Midkey Deferral Fee.

Making partial repayments during your Midkey loan term will reduce the deferred payments percentage that determines your Midkey Deferral Fee. If no partial repayments are made, the original deferred payments percentage (agreed at the start of your loan) will stay the same.

*For every Midkey loan, we apply a minimum 5% reduction to your home’s initial independent valuation. This adjusted figure is called the agreed initial value. We apply this reduction because the economics of Midkey’s No Monthly Payments Loan are designed primarily for long-term borrowers. However, we understand that some borrowers may need short-term solutions too. By using the agreed initial value, Midkey can responsibly offer loans to both short-term and long-term borrowers – while keeping our model fair and sustainable for everyone.

Note: Other differences include establishment fees, valuation and documentation costs, a settlement rescheduling fee, and specific eligibility criteria.

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

‍How it Works:

The Midkey Deferral Fee is a proportion of any increase in the agreed initial value* of your home during the term of your Midkey loan. The proportion is agreed at the start of your Midkey loan and is calculated by dividing your Midkey loan amount by your home’s agreed initial value**. We refer to this proportion as the deferred payments percentage.
For example:

If your Midkey loan is 10% of your home’s agreed initial value at the start of your Midkey loan, your Deferral Fee will be 10% of any increase in your home's agreed initial value.

If your Midkey loan is 20% of your home’s agreed initial value at the start of your Midkey loan, your Deferral Fee will be 20% of any increase in your home's agreed initial value.

No increase in the agreed initial value of your home? No Midkey Deferral Fee. If, at the end of your loan, the agreed initial value of your home hasn’t gone up – or even if it has gone down – you won’t pay a Midkey Deferral Fee. But, for your sake and ours, we hope the value of your home appreciates through the roof, so we can all celebrate at the end. We love a win/win arrangement, and we hope you do too.
Making partial repayments during your loan term will reduce the deferred payments percentage that determines your Midkey Deferral Fee. If no partial repayments are made, the original deferred payments percentage (agreed at the start of your loan) will stay the same.

‍We designed the Midkey No Monthly Payments Loan to be fair, flexible, and performance-based. If your home does well, we share in the upside. If it doesn’t, you don’t need to pay a Deferral Fee

*For every Midkey loan, we apply a minimum 5% reduction to your home’s initial independent valuation. This adjusted figure is called the agreed initial value, and it forms the basis for calculating your usable equity. We apply this reduction because the economics of Midkey’s No Monthly Payments Loan are designed primarily for long-term borrowers. However, we understand that some borrowers may need short-term solutions too. By using the agreed initial value, Midkey can responsibly offer loans to both short-term and long-term borrowers – while keeping our model fair and sustainable for everyone.

Calculate how much you can unlock here.

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