In our first edition we discussed how important it was to know what your different mortgage options are. In this edition we will learn more about the Australian Mortgage.
What An Australian Mortgage Is
An Australian Mortgage uses a paying down method that effectively reduces the amount of daily interest you pay on your mortgage each month. When you have a mortgage payment the longer you take to pay off your mortgage the more it is going to cost you in the long run in interest fees. If you can put extra money toward your principal, over and above the regular monthly payment, no matter how small and insignificant it may seem, it will help to greatly reduce the amount of money that is paid in interest fees. The Australian Mortgage was designed as a means to help people reduce the amount of money that is being assessed for interest fees and thereby reducing the overall amount of fees that are paid over the life of the mortgage loan.
How It Works
The intent behind the Australian Mortgage is to reduce the amount of interest that is paid on a property mortgage and to increase the amount of principal that is applied toward the mortgage. If it is done properly the Australian Mortgage can help to reduce the amount of time that it takes to pay off a mortgage. The savings can be significant and you may be able to pay off your mortgage in 1/3 to ½ the time that it would take using a traditional mortgage method. This will amount to thousands and thousands of dollars being saved in interest payments. So it sort of works like a mortgage accelerator.
In the next edition we will continue to explore how the Australian Mortgage works.
Property Options Australia
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Hi Sean,
This is just good financial sense. Any time you pay more on what you owe; you’ll be saving yourself a ton of interest. It’s about having good financial habits and being able to have the discipline to put the extra money on your mortgage rather than spend it.
I know of a similar statedgy to the Austrlian mortgage option. It involves finding out how much principle you are paying off your mortgage and paying that much again each repayment…effectively reducing you loan by half. Also ensure you have either weekly or bi-weekly repayments as this saves a bundle too.