Are mortgage checking accounts (MCAs) legit?

[pr0crast]

http://www.sydneyfinancialgroup.com/

My mom mentioned this to me. Apparently they have done this in other countries like Australia for a long time. The way it works is if you have a 200k house and you take a loan out to pay it, but you have 120k in your mortgage checking account, you are only paying interest on 80k of the house. If you withdraw 50k from your checking account, then you are paying interest on 170k of the house. Traditional American mortgages, you pay interest on 100% of the loan value for the entire term of the loan.

Legit or no? Anyone use one of these things?

[Nomad84]

Sounds like you are basically putting up a big down payment and getting a HELOC that looks like a checking account. You can't avoid interest unless you aren't borrowing money from them. The 120k in your example would basically represent your equity in the home. If you use 50k of it, you'd basically be borrowing another 50k against the house. BTW, I've never heard of this particular setup...I'm just giving my take on what it sounds like to me.

[SossMan]

total fuzzy math...it plays on the fact that people think that there is a huge difference between 'daily compounding interest' vs. monthly compounding interest. there isn't. at least not enough to make up for the much higher interest rate.

look at it this way...what is the benefit to the lender to offer something like this?