HELOC to Pay Off Mortgage

HELOC to Pay Off Your Mortgage... You may have heard this elsewhere or you heard it from us... You can pay off your mortgage FASTER using a HELOC. Well, it's true! I'm going to breakdown exactly how you can use a HELOC (or just about any line of credit) to pay off your mortgage faster... On average 5-7 years.

We call this strategy & method: Accelerated Banking.
It has many names from different organizations such as Sweep Strategy, Velocity Banking, Mortgage Acceleration, Pill Method, HELOC Strategy, etc.... It has SOOOO many names. But... the REAL name is Accelerated Banking

This strategy hails from Australia. And in Australia, it is reported that 1 out of 4 people use this strategy to pay off their mortgage.

The strategy involves using a Simple Interest HELOC (Home Equity Line of Credit) to pay off your mortgage. It's taking advantage of several things...

1. Lower Average Daily Balance = Less Interest You Gotta Pay.
Using the Open & Revolving nature of the HELOC, we're going to use the HELOC to make a principal payment against the mortgage which further reduces the interest owed as well as the time spent to pay off the mortgage. But now you have a balance on your HELOC. This is where you use your income and savings to knock down the principal balance on the HELOC which allows you to lower the average daily balance YET... Still use the income to cover your expenses out of the HELOC

2. Double Income Utilization
This is a concept where you use ALL of your income to reduce the balance of your HELOC but still being able to use the same income to cover your expenses. In one variation of the strategy, we introduce credit cards to hold all of our expenses while our HELOC is to use to wipe out the balance of the HELOC at the end of each credit card statement period.

3.HELOC is now your new "Savings Account"
By throwing all of our extra savings into the HELOC instead of your savings account, you can actually expect to save 4-7% interest (depending on the HELOC rate), instead of trying to earn 1-2% APY on a savings account. It's a matter of opportunity cost. By decreasing the balance of the HELOC with the savings, you're saving interest by whatever the amount you have "deposited" against the HELOC.

If you're skeptical about this strategy... You should download our FREE Excel Calculator and our FREE ebook that explains deeper as to how this strategy works!

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The Kwak Brothers are millennial real estate investors who have acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping hard-working people become financially free real estate investor! They specialize in owner financing acquisition and raising capital. They are the creator of the FORCE Strategy (Find the deal, Owner Finance It, Raise the Capital, Cashflow It, and Expand your Financial Freedom)

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---DISCLAIMER--- The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and The Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.

[marybusseau]

In response to all of the negative comments, if someone doesn't understand something they should not do it. If they do understand the math and the benefit then go for it. What he is talking about takes a financially stable individual with a lot of discipline. For example, I use my credit card for all expenses, pay it off in full before the due date, and reap the rewards of the 2% cash back. That takes discipline and a steady income and is not for everyone.

[ugahenne]

I did the math - yes it generally checks out, but there is a much much simpler way to do this if you have the extra positive cash flow. Just dump all your extra cash flow into the mortgage principle every month. Get similar results for the same reason (paying principle down EARLY in the amortization curve = biggest saving in interest and time). But with WAY less risk and WAY less need to follow a complex scheme. Just extra payments.

Also avoids all possible risks of a HELOC like the bank closing it, the adjustable rate, and any other hardships. If you are in dire straits and any point, just stop the extra payment, ask for forebearance, etc.

So not saying it's a scam or bad or anything - but extra payments is the way to go for folks that want to keep it simple.

[SheilaYilmas]

Presently, mortgage rates have reached their highest point since the year 2000, spanning a period of 23 years. Considering inflation trends, there's a possibility that this figure might continue to escalate. To provide context, the 30-year fixed rate was only at 5% around this same time last year. Faced with this scenario, the question arises: should I continue waiting in anticipation of a potential housing market downturn before making a purchase, or is it more prudent to shift my attention towards the equity market?

[MrJimmy]

This is a great way to complicate your financial life which people tend to love to

[marklandgray]

Keep in mind lenders can freeze a HELOC anytime (hello 2007-2010) ....a lot of lenders backed off on HELOC business with covid as well and only a few brought them back with restricted terms as well.. in theory this is ok advice and it DOES save you money if managed pristinely.

[jordanpreston]

This is a great strategy! I use it on all my properties. Only thing to be careful on is knowing your current mortgage details inside and out. One of my mortgages only allows a 15% principle pay down each year. If you pay down more then 15% you would be breaking the contract and pay penalties. Play within the rules and this strategy is fantastic!

[dennyinirio]

HELOCS, when used properly is an AWESOME tool!

[mommaoinnh]

My HELOC went from 2.5% to 8.5%. Service credit union. Using a bunch of 0% credit cards for 18 months so I have time to get a renter and get some paid down!

[julianawatkins]

I just ran the numbers for myself and calculated this would save me $8/mo in interest. I want my 16 minutes back.

[krisspinden]

One large risk seems to be that a lender can freeze a HELOC if the they deem the LTV is not in their favor. So, you can no longer use this process, and perhaps any savings you were hoping to use on other things such as a car or college for kids also gets locked in. I wonder if you could address this issue.

[vymadkvymadk]

He is just all over the place. There are much better explanations out there by others

[xraypluto]

I bought my house for 121k. A year later houses fixed up in my neighborhood same square feet, bedrooms, and bathrooms are going for 250k-275k. I’m def about to get a Heloc to fix it up.

[mlambert]

If this has been asked before, I apologize for repeating this question...If you positive monthly cash flow is let's say $2, 000, why not apply that money each month to pay down your mortgage principle? Why use a HELOC with high (10+%) interest rate?

[thenecessitarian]

Seems like it should work....however, it seems to me that there's a catch in that your mortgage payment isn't charged based on your mortgage balance, it's based on the money you borrowed. That is to say if you borrowed 100k at the start of your mortgage and your balance today is 5k dollars then you're still paying the full amount on the bill for 100k until you pay off the balance in full. So if you use a heloc to pay down a mortgage balance you're going to get charged two payments instead of So, unless you completely reshuffle your debt by paying off the entire mortgage balance in one swoop using the heloc, then your monthly payments may increase quite significantly depending on how much money you borrowed against the equity and what the interest rate for that heloc account is. Correct me if I'm wrong though.

[boyfromthemountains]

Much more than I ever learned in my school life.

[StocksDoc]

the BEST of these type of videos . . . explains EVERY detail

[sirturdaloter]

It all depends on cash flow after bills. Be sure to have an emergency fund for the unknowns, (water heater, tires, medical). You just put your check in the HELOC every month and depend on cash flow to pay it off.

[ricot]

If the mortgage is paid out of the HELOC monthly, how would that be different from the monthly payments you are currently making ?

[Bertha-Bryant]

Awesome video. Very generous of you to share this.

[bennettlockandkeymattandja]

This would take a lot of spending discipline to not eventually max out the HELOC and still owe a huge mortgage.