Velocity Banking: The most effective strategy to pay off mortgages quickly
Velocity banking has recently made quite a round of fame these days among many investors and business people across the world. And especially those people who want to pay off their mortgages are often heard talking about Velocity Banking and how this strategy is helping them in paying off their home loan. But the question is, what exactly is it?
Well if you too are a bit confused about Velocity banking then you will definitely have all your queries answered here. In this blog we have explained everything you need to know about Velocity Banking and how can you start with it.
Basically, mortgages can take a very long time to be paid off and life becomes very stressful due to it. It can stretch to as long as 5 to 10 years and the one who is paying off the mortgage, bit by bit, becomes really stressed out due to it. However, with Velocity banking you have a way to cut yourself loose with this issue. It is a concept of opening a Home Equity Line of Credit also known as HELOC and then making it your primary account for checking where you begin depositing your income on a monthly basis and pay all your expenses. When you open your HELOC account, you will initially incur a giant sum of money to your mortgage considering the limit of HELOC. Now once the HELOC account is made, you will get income and pay out your expenses within the HELOC as your checking account and pay off your outstanding balance as well.
Now once the balance is paid, this can be repeated by making lump sum payments, until the mortgage is finally paid off.
The idea behind Velocity banking is that whatever extra money you make every month will go to paying off the HELOC. This strategy includes with it a number of other variables as well, such as early payment terms on a mortgage, current cash flow, the interest rate for HELOC etc.
It is often said that Velocity banking isn’t always the best home loan reimbursement procedure as people will pay more in premium installments contrasted with those people who can deal with sudden monetary circumstances and dedicate their free money streams straightforwardly to their mortgage. The basic reason behind the arrival of velocity banking in the world of banking is that it comes basically as a device to assist individuals with paying off their mortgages quickly when they experience serious difficulties setting aside some cash or have nothing spared in any case. On the off chance that you have a ton of cash in investment funds, you could use velocity banking.
The individuals who share in venture properties regularly utilize velocity banking. However, these individuals use it in an alternate form to which they require a higher fee income and they are expected to have more costs expenses as per the number of properties they manage. With HELOC you have a great chance but it is also very important to note that multiple HELOC accounts will only increase your problem because it naturally causes a financial burden or monetary weight on the shoulders of the one who has them.
Velocity Banking isn’t the quickest technique for satisfying and paying off a home mortgage. Making additional installments equivalent to your free cash flow on your home loan is really the best procedure with regards to brisk reimbursement and reduced interest paid. However, at the time of making additional reimbursements, you’re not ready to see that value until you’ve sold the land or connected for a Line of Credit.