Mortgage Schemes
When I first heard of the Macquarie Mortgage it piqued my interest. This loan program supposedly originated in Australia and promises the unsuspecting borrowers that they can pay off their 30-year mortgage in 12 to 13 years. I asked myself “how could this be, it sounds too good to be true?” When a person I know who had a 30-year fixed mortgage at 5.5%, refinanced into this program, I had to find out more.
The following is how this mortgage loan unfolds, and it is based on a $200,000 loan at 6% interest rate with an annual income of $100,000.
It is a 30 year Home Equity Line of Credit (HELOC) with the first 10 years being an interest only payment. The initial interest rate is approximately 7.00%, but the rate adjusts each month, it is not fixed.
The account is also used as your primary household account, but you do not earn interest on the money you put into it. The borrower deposits his payroll checks into this account and these funds are automatically credited towards the loan balance. This in turn lowers the balance of the HELOC and supposedly lowers the interest due on your required payment.
You would then write your monthly checks for bills, groceries, gas, entertainment and etc. These withdrawals are added back into your loan balance, raising the amount of interest owed.
You are not told directly that in order to pay off this loan in half the time, it would require you to pay up to 20% of your net income towards the loan balance each month and never withdraw any of that money. The term I saw being used on their website was savings. You are asked how much can you save in a given month, not how much you are willing to pay against the loan balance. Saving 10% of your net income would cut off 2.2 years; 15% reduces the pay off time by 10.7 years. If you were not able to save any money each month, you would owe the full amount of the original loan after the 10-year interest only period. Your monthly payment would sky rocket it order for the loan to be paid off in the remaining twenty years.
This type of loan is setting borrowers up for failure! Very few of us are able to put 20% of our net income aside and never withdraw any of it. Also, the temptation of knowing you can write a check against this HELOC account takes more will power than many of us have. I have a sick feeling that this is what the lender is counting on, so they can collect an astronomical amount of interest from just one loan. For the majority, this loan will not work.
A person would be far better off if they took 20% of their net income and deposited it into a saving account or invested it into mutual funds, stocks or bonds. Placing more into your 401K and taking advantage of the pre-tax status would also be more beneficial to you than the above mortgage loan.
Before getting yourself caught up in this, or any other designer loan, please call Denise Wing at 303-987-0622.
Academy National Mortgage
Denise Wing
Certified Mortgage Lender
The following is how this mortgage loan unfolds, and it is based on a $200,000 loan at 6% interest rate with an annual income of $100,000.
It is a 30 year Home Equity Line of Credit (HELOC) with the first 10 years being an interest only payment. The initial interest rate is approximately 7.00%, but the rate adjusts each month, it is not fixed.
The account is also used as your primary household account, but you do not earn interest on the money you put into it. The borrower deposits his payroll checks into this account and these funds are automatically credited towards the loan balance. This in turn lowers the balance of the HELOC and supposedly lowers the interest due on your required payment.
You would then write your monthly checks for bills, groceries, gas, entertainment and etc. These withdrawals are added back into your loan balance, raising the amount of interest owed.
You are not told directly that in order to pay off this loan in half the time, it would require you to pay up to 20% of your net income towards the loan balance each month and never withdraw any of that money. The term I saw being used on their website was savings. You are asked how much can you save in a given month, not how much you are willing to pay against the loan balance. Saving 10% of your net income would cut off 2.2 years; 15% reduces the pay off time by 10.7 years. If you were not able to save any money each month, you would owe the full amount of the original loan after the 10-year interest only period. Your monthly payment would sky rocket it order for the loan to be paid off in the remaining twenty years.
This type of loan is setting borrowers up for failure! Very few of us are able to put 20% of our net income aside and never withdraw any of it. Also, the temptation of knowing you can write a check against this HELOC account takes more will power than many of us have. I have a sick feeling that this is what the lender is counting on, so they can collect an astronomical amount of interest from just one loan. For the majority, this loan will not work.
A person would be far better off if they took 20% of their net income and deposited it into a saving account or invested it into mutual funds, stocks or bonds. Placing more into your 401K and taking advantage of the pre-tax status would also be more beneficial to you than the above mortgage loan.
Before getting yourself caught up in this, or any other designer loan, please call Denise Wing at 303-987-0622.
Academy National Mortgage
Denise Wing
Certified Mortgage Lender
posted by Academy National Mortgage at 7:23 AM
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