Australian Mortgage

Over the past year a new phenomenon has hit the United States from the world Down Under. It's called an Australian Mortgage and refers to a financial strategy that's been used in the Australian and European markets for many years.

The purpose of the Australian Mortgage is to decrease the amount of interest that you pay on a mortgage while increasing the amount of principal that you pay towards the mortgage. The net effect is that you can own your home free and clear in 1/3 to 1/2 the time it would take to pay of a traditional 30 year mortgage. If used properly homeowners can save tens of thousands of dollars in interest payments to banks over the term of the mortgage.

In other words, the Australian Mortgage is a type of Mortgage Accelerator. The concept is not a new one, it's just being packaged and marketed differently and the American Citizens are now becoming aware of this mortgage planning tool.

How Does an Australian Mortgage Work?

An Australian Mortgage requires that you refinance your traditional fixed rate or ARM mortgage into a Home Equity Line of Credit.

• A HELOC is acquired on the subject property. Sydney Financial will help you get the HELOC that makes the most sense for you.
• This HELOC will be used as your primary checking account, ATM and on-line bill pay account. The Australian Mortgage replaces your current checking and savings account.
• Your monthly income from paychecks, dividends etc is deposited directly into the Australian Mortgage which dramatically drives down the principal balance on your mortgage.
• All your expenses, including bills, grocery shopping, entertainment etc is paid out of your Australian Mortgage. The longer the money stays in the account, the less interest that you pay on your principal balance. This uses the money that is currently sitting in your checking account, earning little or no interest, and keeps your loan balance lower.

With the Australian Mortgage concept, less of your income is going towards paying interest which leaves more money to pay down principal and pays off your home mortgage faster with no change in spending habits.