iamthecreaturefromuranus

They sound like they fall in the 'too good to be true' bracket.

ABCDiamond

freebo

I take it you mean interest-only mortgages, there's one born every minute...

longreach

I would never ever go on an interest only mortgage unless it was for an investment property. How would that reduce your mortgage?

Do a search on equity managers or revolving line of credit relating to mortgage reduction

freebo

I can do a search but you're the one peddling it.

So you have spruiked my interest (no pun intended) , I'll ask "what kind of mortgage involves no repayments?", no need to be too basic; I am reasonably financially aware...

iamthecreaturefromuranus

http://www.financiallyfree.com.au/home_loans.htm#HOME EQUITY LOAN/LINE OF CREDIT

I would say that they are dodgy in the extreme for 90%+ of people

longreach

Why?

Not that I would take that link as gospel, but where does it give the opinion that they are dodgy in the extreme for 90%+ of people?

It has worked 100% for everyone I have used this with including my own. Fair enough if it's not for you but don't assume that everyone is the same as you and wants a 30 year home loan!

longreach

A revolving line of credit is similar to the old 'One Account' we had in the UK.

You have 1 account... think of it as an overdraft. This is secured on your house. Income is deposited into this account and interest is then debited which is calculated on your daily balance. Because all of your income is used to reduce your capital balance on day 1 of the month, the monthly interest charge is significantly reduced. You should also use it in conjunction with a 55 day interest free credit card which 'auto sweeps'. This maximises the amount of time your income is being used effectively. I would also recommend that your credit limit reduces in line with a normal mortgage term for protection.

The average time frame to pay off your loan, depending on individual circumstances, should be 7-10 years if set up correctly. And it works without you paying anything extra - it just uses your existing income more effectively.

I have used it personally and I only recommend what works from personal experience.

And if it makes you feel any better, I'm a qualified accountant also

I hope that helps - I know it's different to what people are used to but that's only because most of the banks don't want you to go on them. Think of the shareholders!!

There are reasons why 90% of the worlds wealth is held by 10% of the population - they do things different to the masses

freebo

So you're just talking about an offset mortgage, nothing new or revolutionary. Although unless your net balance is positive I'm pretty sure repayments are required.

Of course, if one has a higher amount on deposit than is required for the mortgage it can be a useful way of running a large line of credit at preferential rates. But again that's been well known for many years.

Very true, for a start they don't have residential mortgages, even offset ones.

longreach

1. No. It's similar to an offset but more effective as I explained. An offset still requires a traditional mortgage account.
2. I never said it was revolutionary, which it isn't - I only said it works!

iamthecreaturefromuranus

Everything I have read about them says that that are totally reliant on you keeping control of your finances to an extreme degree.. something that the bulk of people don't manage to do.

freebo

1) In what way is it more effective? Because it involves balance sweeping? My bank's been doing that for me since 1995 (Barclays Premier Banking).

2) In what way does it "work", i.e. any better way than a well structured financial plan, coupled with an off-the-shelf, no-commission-to-you financial plan?

And, while we're on.

3) If it is so different, which financial organisations offer it, and under what conditions?

BTW, the reason I'm grilling you is you appear to be touting for business on a public forum and I'm trying to figure out if you have anything to offer for the free advertising you appear to be trying to obtain.

longreach

I've been a member on here for over 5 years. I'm not touting for business - I honestly couldn't care less whether you took my advice or not and with whom if you did. I get enough referrals from my existing base because I do the right thing by them. I'm only trying to offer suggestions to those worrying about rising interest rates. It's a sad day indeed when you cant even give away advice based on ones knowledge and experience.

As for your questions:

1. I never once said that its new or revolutionary... although it's relatively new for Australia and last time I checked Barclays was in the UK. One of the reasons is balance sweeping together with the ones I gave in my previous post. It's having them all together that makes it so effective.

2. You would have to provide me an example of a structured plan for me to compare but in summary, a well structured financial plan should have effective tools for reducing non tax decuctable debt as quick as possible as part of it, in my opinion.

3. There are a few banks. Generally they require a maximum LVR of 80%. Otherwise the usual qualification criteria apply as for any home loan. While I don't work for a bank, I'm not going to actively market one over another on a public forum without detailed knowledge of ones circumstances. I've given enough information to research yourself should you wish.

freebo

I'm sure you're a reputable person, but when I read "a mortgage which requires no repayments" alarm bells went off, something which I haven't yet seen substantiated.

I have no requirement for a mortgage but if I could acquire one with no repayments I'd get one immediately, and invest the money (but not in Australian housing).

longreach

Under control - Yes. Extreme - no.

Financial planning is something everyone should do.