Managing Your Money

Homing in on your finances – a total solution to all of your banking and financing needs 

It’s so popular Down Under it has become known as the ‘Australian Mortgage’*. It’s rapidly gaining in popularity here in Canada.  And, it could be a solution for your banking and financing needs – a flexible solution that helps every dollar you earn work harder for you. 

Here’s how this cash management solution works:   

Most Canadians use a number of financial products including chequing and savings accounts, credit cards, lines of credit, personal loans and mortgage loans to manage their finances.  In conventional banking, all of these accounts are kept separate so you need to manage many different payment schedules, payment amounts, interest rates and multiple account statements – and that can become a nervous juggling act. 

At the same time, you enjoy plenty of equity in your home, you have a good income and positive cash flow and, in general, your financial life is improving – thanks to declining debts and increasing assets.  Still, you could benefit from low-cost financing or refinancing and loan consolidation; you want higher returns on your savings and more money to invest; and you want to simplify your financial life. 

That’s where this new cash management solution comes in.  It uses the equity in your home to allow you to consolidate all of your banking and financing needs by integrating the features of a mortgage, a line of credit, a chequing account, a savings account, and a source of money that can be used toward investments all into one comprehensive solution. 

You can access up to 80 per cent of the value of your home and combine your mortgage and loans within various sub-accounts into one account with one monthly payment and one consolidated monthly account statement. 

It’s simple:  You deposit money when you get it (your paycheque, for example) and take money when you need it.  Your deposits are applied to your loan principal, reducing your loan balance, and minimizing interest charges.   You withdraw from the account to cover day-to-day expenses.  Money you don’t spend offsets your loan principal which helps save on interest normally charged by your mortgage, and in many cases these savings are more than your would earn from a typical savings account at a bank – this can save you money and put you on track to reaching your financial goals sooner. 

By combining your debts with your savings, your money works harder and your financial life becomes simpler.  Talk to your professional advisor about this smarter way to help build wealth and help manage your daily banking needs and how it fits into your overall financial plan.

*More than 50% of all new mortgages in Australia are opened as a combined chequing, savings and borrowing solution – London Free Press, February 9, 2004

This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments.  Contact  a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.