Things You Should Know About Velocity Banking

by Radhika Pawar creative content writer

Are you looking for a quicker way to pay off your mortgage? If so, it’s important to find better ways of making your money work for you. One of these ways is by leveraging velocity banking. It is described as a better way to pay off a 30-year mortgage.

Some people even think it can be 60-80 % quicker. It sounds great, doesn’t it? Could it work for you? Here’s a guide to velocity banking for smart people who want all the facts before jumping in.

HowDoes Velocity Banking Work?

Velocity bank strategy is also known as HELOC strategy. This is because many people use a home equity line credit to increase their cash flow when using this method. The HELOC is used to pay down your mortgage more quickly than you could by using your paycheque or salary alone. Thissaves, one because you paylessinterest to the bank over the life of the credit.

Businesses use similar mechanism when they issue bonds to raise money for certain purposes, such as paying off debt. In the process, they increase their leverage and optimize their returns. With velocity banking, you effectively do the same but at a personal level.

IsThere Something You Should Do Before Velocity Banking?

Your mortgage provider may not allow chunking payments or may charge you for the privilege. You need to check this before even consider the velocity banking process. You will also need to know your current interest rates on your mortgage and other debts. In addition, an assessment of your income and expenses is crucial.

The more accurate you can be with the information, the better assessment you will make and the less likely you are to be surprised by charges you hadn’t factored in. Keep in mind checking your credit scores is also essential. Furthermore, you need a credit card to pay for normal living expenses. Most importantly, prepare yоurself mentally.

If you think that velocity banking is not meant for you, at the end of the day, paying debt down is the only way to get rid of it. This approach will only speed up the process.