How Velocity Banking Works

This video explains how the Velocity Banking strategy works.
Velocity Banking is a strategy where you use a line of credit as your primary account and use lump sums to pay off a loan, usually a mortgage.
The idea behind Velocity Banking is using a line of credit will help you use your cash flow and extra money to cover expenses and also pay off your mortgage. Often the Velocity Banking strategy involves using a HELOC.
Determining the right financial strategy for your situation can be tricky, especially when there are so many options available like infinite banking, velocity banking and others.
After watching this video you will understand how the Velocity Banking strategy works. If you're unsure if Velocity Banking is best for you, schedule a free consultation with our office. We’re committed to finding you the best strategy for your specific situation.
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[birdenlightening]

I think you mentioned a wrong premise. There’s no way mortgage interest would be the same as heloc’s. The latter is always higher.

[InfiniteVelocityUSA]

Using the cash value of life insurance instead of the heloc maximizes both IBC and VB.

[breezybre]

Who has the $1000 leftover at the end of the month? And....you can't get a HELOC unless you are in a 20% equity position so what do you do if that is not you?

[DanielFlood-hjby]

I dont think you mentioned that sending money from pay check to pay bills from HELOC, also eliminates the HELOC min payment.

[bryontharp]

What if you can't have heloc what can you use

[HomeIdeas]

Please be careful of saying Velocity Banking Strategy as using a HELOC. The HELOC is just a tool to use the VB strategy. You can use the strategy with a Credit Card, PLOC, or as you mentioned Life insurance plan. Which is, in my opinion, the best tool to use.

You still need to cut debt, but do you use a box cutter, a butter knife, a steak knife, or scissors? They all will work, some better than other. But the objective is to CUT. Velocity banking does that, builds credit faster, lowers debt faster an increases ur cash flow.

Plus you don’t max ur LOC/LI plan, you borrow a portion and IF you need to buy a plane ticket, buy Christmas gifts, or go on vacation, you still have the ability to do that!

But great - simple explanation of how it works! Thank you.

[iamajcoleman]

You didn’t reduce the mortgage over the 9 month span…you left it at $88k which it would’ve been paid every one of those 9 months so all the math after that is inaccurate. It would’ve paid off faster than you stated…also the time frame grows more and more the larger the mortgage is (assuming the line of credit is the same)

[oldporkchops]

The graphics sure help visual learners like me. Kudos to the Life Benefits team for putting many hours towards creating them.

[stoveguy]

I have 60k 5% mortgage. No car loan. No credit card balance. And $2k cash flow. So, extra mortgage payments and it could be paid off in 30-35 months?

[ujvjszv]

Excellent! Will just pay off early with my sweat and unborrowed money.

[siddiqze]

Change the payment frequency to biweekly and this way 26 payments will come out i.e. 1 extra payment compared to 12 months or 24 twice a month.
Also pay extra every month and u won't feel the burden of using heloc as in reality you are taking from Peter to pay Paul.

[contrarian]

The original stated scenario was that john and sarah wanted to pay off the mortgage faster than the 30 year schedule, (Thats all). They accomplish that goal with velocity banking via a HELOC. It didn't say john and sarah wanted to increase savings, build a legacy, save for retirement, etcetera, just pay off the mortgage... The fact that they could have paid a thousand dollars per month directly to the mortgage is irrelevant because john and sarah may have chosen to use the bank's money not their own. buying a WL policy will give them growth but not immediately and paying down their mortgage would get them faster to their goal. Also, It would have been nice to see how the example works with the WL policy in place of the HELOC. but I do like the visual presentation.

[infinitevelocityCA]

Still practice VelocityBanking and stoked at the results. I just sub in my cash value as my line of credit (IB) and then when I repay it is recaptured.

All repayment funds cycle through policy first. Use a policy loan as the LOC to make the chunks for VB.

[DerivCapital]

I would MUCH rather pay off my home in 6yrs even if it drains my pockets then pay 200k for the home over 30 yrs 100k in interest NO THANK YOU!

[ask_why]

Also, #2 works both ways – as you used “all your free cash flow” to make that $1, 000 extra mortgage payment – the one needed to “beat” VB.

[ask_why]

But the HELOC allows the couple to access the money over and over - paying an extra mortgage payment - locks that money away out of their reach.

[trinityvautaw]

I really appreciate the strategic caveats in the back half of the video.

[KayDejaVu]

Only one month? For credit cards, I am saving more than one month. The cards are paid down quite fast since I make more than what my expenses are.

[bobhammell]

Great comparison with numbers between velocity banking and just paying extra

[christopher]

Wouldn’t it be better to just make extra payments into the principal? As u can control how much money ur putting in, rather than paying off a mortgage by creating more debt?