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Australian Method of paying off a mortgage

Posted on 2014-12-15
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Last Modified: 2014-12-27
Hello,

Does anyone have any information about the Australian Method of paying off a mortgage?  What software is required?  I'm assuming that this "software" would be coming from the financial institution, but I'm a bit unclear about how to go about this.  I'd like to payoff my mortgage ASAP, but wanted to know if anyone has had any experience with this and the pros/cons about this mortgage solution?
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Question by:uppercut7141
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by:d-glitch
ID: 40500584
There is some general information here on paying off your mortgage faster:
     http://en.wikipedia.org/wiki/Mortgage_acceleration

In particular, the article notes that the Australian Method has been outlawed in Australia.
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by:d-glitch
ID: 40500751
Your really don't need any software or program to pay off your mortgage faster.
You can set your monthly payment higher than the required amount.
You can make extra, one-time, periodic, or occasional payments as y our cash flow allows.

A simple mortgage calculator in Excel is all you need to look at various scenarios.
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by:uppercut7141
ID: 40500776
Do you have an link I can try to do this?
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LVL 27

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by:d-glitch
ID: 40500792
Here is one    http://www.skipton.co.uk/mortgages/mortgage-calculators/flexible-payments-calculator

I also have an Excel spreadsheet somewhere.  I will try to find it.
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by:d-glitch
ID: 40500815
I found it.  If you let me know the interest rate and the term, I will set it up.

It can calculate the standard payoff say for $100K, then you can what higher monthly and/or occasional payments do for you.
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dhsindy earned 500 total points
ID: 40502196
This merged account method can be risky if you are not disciplined and understand cash flow.  That is why it is prohibited in many places.  The first thing you should do is find out if it is legal where the property is located.

This type of account basically operates like a secured credit card similar to what most people call a second mortgage.  You have a large balance secured by the property and the interest on the balance is calculated daily (rather than monthly like a first mortgage).  Your bill payments or deposits adjust the running balance when they are made.  So, if you pay your bills as late as possible (keeping the balance lower) and make your deposits as early as possible (keeping the balance lower)  your money works better and saves you on the daily interest calculation .  But, if you're not disciplined or over spend it can end up costing you more as your balance will go up instead of down.
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