How this strategy works

A HELOC is a revolving line of credit secured by the equity in your home. Some homeowners use a HELOC to make one lump-sum principal payment against their mortgage, then aggressively pay off the smaller HELOC balance with monthly cash flow (this is sometimes marketed as "velocity banking"). The idea is that shrinking your mortgage principal sooner reduces the interest that accrues on it every month, even though you're now also paying interest on the HELOC in the meantime.

This calculator simulates both paths side by side, month by month:

• Baseline: your mortgage, paid as scheduled, with no changes.
• HELOC strategy: a lump sum drawn from your HELOC is applied to your mortgage principal immediately, then your extra monthly cash flow pays down the HELOC. Once the HELOC is paid off, that same monthly amount is redirected to extra mortgage principal payments.

Before you try this: the benefit of this strategy comes almost entirely from the extra monthly amount you put toward debt, not from the HELOC itself. Many financial advisors point out that simply sending that same extra amount straight to your mortgage principal every month — with no HELOC, no variable rate, and no risk of a lender freezing or reducing your credit line — produces very similar savings without pledging additional access to your home's equity. Run both scenarios (set the HELOC draw to $0 to see the "just pay extra" case) and compare. This tool is for education only, not financial advice; talk to a fee-only financial advisor or your lender before restructuring debt secured by your home.

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