When you hear the term Australian mortgage, some of you may think of the Mortgage Bank of Australia’s advertising campaign from late 2012. As part of its marketing campaign, the bank referred to a special type of mortgage with a declining interest rate calculation. The higher the mortgage you took out with Mortgage Bank, the higher the discount on the interest rate (note: ranging from 0.1 to 0.4 percentage points). The discount applied only to mortgages with a five-year fixation. Apart from the way the interest rate was calculated, the Australian mortgage was not fundamentally different from the conventional mortgage.
The difference between Australian and American mortgages
Only Hypoteční banka is allowed to use the phrase Australian Mortgage as the bank registered it as a trademark with the Industrial Property Office in 2012. In addition to the Australian Mortgage, you will now much more commonly see the term American Mortgage. In this case, it is a special type of mortgage loan that is secured by a lien on the property and the use of the funds is non-purposeful. Therefore, you can use the money you get from the bank for anything. American mortgage is a general term and can be used by any bank.
The original meaning of the Australian mortgage
Australian mortgage is a term that has been known abroad since the 1990s. It is a special type of mortgage where the bank only pays interest on the difference between the outstanding balance of the mortgage loan and the monthly balance in your current account. In the Czech Republic, this type of mortgage loan is known as an offset mortgage.