Is this like... an Australian Mortgage?May 02, 2022
In Australia, a majority of homeowners will own their home outright far faster compared to Americans in similar income brackets. The main reason is Australian banks offer something called a Sweep Account — essentially a line of credit that is used to pay down debts quickly. The Sweep Account is much like a checking account with a payday advance attached to it. Australians deposit their income into the Sweep Account and pay all of their bills from that account. From time to time, they’ll leverage more than they have available in liquid savings (cash) and blast away chunks of higher interest debt. The end result is a paying off/down of debt in rapid fashion.
The main reason the Australian Mortgage hasn’t caught on in the US is the lack of understanding by American consumers (and candidly the banking industry). Where in Australia, these sweep accounts are easier to obtain, in the US, in can take upwards of 1-2 months to open a HELOC (Home Equity Line of Credit).
Purely speculation, but we believe that the U.S. banking industry has purposefully sidestepped programs like these because they eat into the lenders’ profit.
Is this like... Velocity Banking? Let's find out...