How to Pay Off your Mortgage in 5 Years

this is Sam Kwak, one of the Kwak
brothers, real estate investor, and the author of the book, fire your boss and in
this video I want to show you guys how you can pay off your mortgage within
five to seven years. Now, Before I go on with the breakdown and the explanation
of the strategy, I want to make sure you guys get some disclaimer so that you
guys are protected and then I am protected as well so real quick I am NOT
an attorney I am NOT a CPA nor am i a financial planner so anything that I say
or mentions of legal tax or financial planning advice please don’t take it as
an advice but rather as a suggestion based on my own experience and my own
understanding of the strategy now this is gonna be also a short 15 less than 15
minute video so make sure don’t try this alone okay if you guys have any
questions if you guys any need any help if you guys need some personal help I’m
gonna leave a link down below at the end of this video I’m gonna give you a link
to go to to see further explanation and I’m also gonna give you guys a little
more breakdown in that in the link that I’ll send you to at the end this video
so make sure you guys understand that I get it there’s other videos that will
show you this strategy but remember it’s really crucial that you get some help a
third party or a third pair of eyes sort of speak to help you guys use the
strategy so the purpose of this video is just give you an overview an idea a
possibility on how you can implement a strategy in your own situation so that
you don’t have to pay you know a huge sum of interest and spend all the time
the world trying to pay off your mortgage so let me go ahead and flip the
camera around and I’m gonna show you guys using a marker and piece of paper
give you some illustrations and how these how the strategy will actually
work all right guys I’m gonna flip the camera around so I’m gonna show you guys
to break down and and these explanation as far as how this strategy works now
before I get to the actual strategy I want to show you guys how and why
mortgages work right and why I think they are inefficient so I’m gonna break
down the mortgages in a chart for you in relation to interest versus principle
now for those don’t know what principal is principal is the actual loan balance
so if you have a hundred thousand dollar loan
you’re bound your your principle balances $100,000 get it interest is is
the expense that you pay to use the bank’s money okay that’s basically
bank’s profit so I’m going to draw the chart for you here
the x-coordinate it is time so we’re gonna label with zero months this is
gonna be 30 years and right between is 15 years okay this is gonna be your
monthly payment amount monthly payment so let’s say we’re gonna give it a give
a good example here a hundred thousand dollar loan okay five percent interest at 30 years a ssin it’s gonna be just
around about four or four hundred dollars right and guys don’t quote me
here I don’t have the amortization calculator in front of me but based on
my experience it’s around four hundred bucks for principal and an interest of
all so with that four hundred dollars in mind this curve here is gonna be your
interest payment and this curve here is going to be your principal balance so if
you guys notice that first you know the first half fifteen years
bulk of your hundred payment is actually interest payments right in the early
months very little is gain taken out of your actual hundred thousand dollar
principal balance so in that four hundred dollars most people think that
if we make that four hundred payment our loan is going back down to ninety nine
thousand and six hundred bucks right guys that is not the case in fact maybe
like fifty hundred bucks if not even less are gonna be the actual principal
payment that’s gonna go and lower the the balance from a hundred thousand to
you know the principal payment whatever we’re subtracting here so do you guys
see how the first fifteen years you guys are actually not making much progress as
far as paying off your loan in fact the first ten to fifteen years this is where
the banks make money thanks profit does that make sense guys so
what’s really interesting and for me it’s kind of entertaining most bankers
will come to you and say hey you know it’s been about 10 years how would you
like to refinance your mortgage for a lower payment how would you like to pay
$350 instead of $400 right most people would say wow you know I’m saving $50
that’s actually a pretty good thing but what sucks is that and what they don’t
tell you is that we’re basically resetting our clock back to zero months
and we’re paying all of this interests all over again kind of sucks isn’t it
right we’re actually paying more interest by refinancing by resetting a
clock back to zero right because if we did a refinance and continues and paid
to 15 16 17 18 and so on we’re actually gonna be making more that principal
payment and we’re actually gonna be doing much better in our progress as far
as paying off our our principal balance now what’s really important is that this
is something that you should know if you guys are taking notes or if you guys
have pen and paper in front of you the lower the principal balance right as the
principal balance gets lowered so will be interest right I’m a huge Star Wars
fan so I’m gonna make this reference if you if you destroy the shield generator
the Death Star is open to being a you know vulnerable I know guys I’m a geek
I’m in there I wanna that’s the best reference an analogy can give you so
kill the principal and you’ll also kill the interests too so it’s really
important that we take the principal balance down so that we’re not paying
interests does that make sense so that’s one of the pillars or I should say the
core kind of supporting you know methodology to making this strategy work
okay now the other ins illustration on a hundred thousand are alone at five
percent interest okay I know I can’t spell here 30-year
mortgage EMAS ation most people think five percent interest is not bad okay
but little do people know that actually will amortize and will become compounded
to actually be coming around 80,000 to $100,000 on interest alone so on that hundred
thousand dollar loan that’s the principal balance on a 30-year Bogey’s
30-year amortization five percent interest we’re actually paying hundred
thousand dollar interest alone plus our original loan amount is gonna be around
one hundred eighty thousand to two hundred thousand dollars we paid to the
bank now guys if we’re gonna pay her thousand dollar interest we just bought
a bank another house right we got a house and they got a house so you know
you guys can see how mortgages kind of suck doesn’t it
right we’re paying a lot of interest take so long 30 years that’s like you
know that’s that feels like forever it really does right I’m actually scared
that some of these banks are coming out with fifty realization for you know the
pseudo pseudo loans that is crazy right that is insane that’s ludicrous this
shouldn’t be the case and that there has to be a better way in paying off our
property there has to be a better way to buy houses without paying 100 percent
interest to the bank there is there is a methodology there is a strategy that I’m
gonna show you and this is why you’re watching the video right to pay off your
mortgage faster and you guys probably already know this right this is all
gonna be in what’s called Truth in Lending statement banks will give you
this and though they won’t tell you the truth and how mortgages work
now there’s another debt instrument that that I like to use to pay off your
mortgage way quicker and with this strategy we’re gonna accomplish are
these these are the objectives or I should say the overall concept overall
finished touches as far as how the strategy work so this strategy is called
velocity banking what we’re doing is we’re we’re accelerating how our debt is
being paid and it is known that about sixty six percent interest savings with
this strategy we’ve got about sixty six percent of time saving as well and it’s something some cases 5 to 7
years of total payment amount and we’re gonna keep the same amount of expenses
alright we don’t have to incur more more loss we’re not paying a penny more on
the mortgage trust me and same amount of income so I’m not
gonna tell you to go get a better job not gonna go tell you – you know skimp
and save right save and save every single penny right I’m not gonna tell
you to go clip coupons guys what I’m telling you here what this strategy will
help you is still keep the expense the same still keep the income the same same
way but we’re saving 66% an interest and 66% on time of of the payment period
cool and some of you guys might be saying this sounds way too good to be
true this has to be some sort of scam right or something guys may say this is
too risky this is two different guys I’m gonna show you the overall general
concept as far as how this work and the math behind it now this is the only
gonna be a short video you’re not gonna get the full understanding I get it most
of you guys want that’s what I’m gonna I’m gonna share a link at the end of
this video on on a live example I’m gonna actually show you a spreadsheet an
Excel spreadsheet and give you guys the actual breakdown as far as how the
strategy will work in numbers but for now I’m giving you guys the concept so
I’m gonna introduce you guys a new debt instrument a new way I knew I should say
a revolution right but this has this actually has been around for a little
bit and most people don’t know it’s called home equity line of credit also known as a HELOC now the banks have
been selling this product for about 15 17 years it’s been around for a little
bit but the reason why bankers don’t tell you about this instrument is
because remember huh you remember our illustration with this you know they
want you to make you know all this crazy they want you to actually pay right
where to go I’m trying to give you guys the
illustration again they want you to pay a hundred percent right they want you to
pay this amount interest they don’t want you to save interest it’s not that’s not
their interests right that that’s funny that’s not their interest right there
that’s that’s not what they’re after they want you guys to make ton of
interest payment so they can make money even though the interest rate is gonna
be variable and and it’s gonna be higher than a mortgage why those two things
aren’t gonna matter as much and it’s actually gonna save you more money this
way okay I want to show you I know it’s a little backwards and it could be
confusing I’m gonna show you guys number one the distinction between a mortgage
versus a HELOC here we go so lowest mortgage versus a HELOC first of all key
locks are open are open-ended and your mortgage your mortgage broker slash
banker will know this open-ended and this is gonna be closed ended what that
means is let’s say for example you make a payment of thousand dollars to the
banks I’m gonna draw the best bank as possible there you go right that money
cannot be on a mortgage situation you can’t use that again right you can’t use
it okay but on a HELOC you make the thousand dollar you made a thousand
dollars on the HELOC principle payment you’re gonna be able to use that
thousand dollars again does that make sense guys so it look it works just like
a credit card credit card you have a limit and a home the whole nine yards
here in the mortgage you’re not you’re kind of stuck right you pay the thousand
dollars that’s it it goes to the principal and interest the end on the
HELOC you use thousand dollars you pay it off again you use five hundred
dollars pay it off right just like a credit card now the next thing the
distinction is that he locks the the the interest is calculated and applied on
average daily balance and what that means is that every day so Monday let’s
say you have a hundred dollar balance on Tuesday
you have $90 balance and on Thursday let’s say you have $50 balance right so
each day you bring down the daily balance so well your interest go down
someone who’s really quick show you guys how the average daily balance works
let’s say you have a hundred dollars just like the Monday’s example all right
it’s gonna be multiplied by the interest rate so point zero seven get it and it’s
gonna be divided by 360 days it’s the commercial lending year and whatever
that is is gonna be the average daily interest right and that’s gonna get
applied every single day as long as you have hundred dollar balance so let’s say
from Wednesday through Friday you have hundred dollar balance from Wednesday
through Wednesday through Friday whatever this amount is getting applied
each day but let’s say from Wednesday to Wednesday you had 100 bucks balance on
Thursday you have 90 dollar balance well guess what guys the next day this is not
gonna be hundred bucks this is gonna be ninety dollars so on Monday or I’m sorry
Wednesday you may have had let’s say I’m trying to calculate here let’s say five
dollar interest well the next day because the balance is lower Thursday
not Tuesday we’re going backwards here Thursday you may have more like a third
for dollar interest so you see how the balance on a HELOC every day it matters
okay the longer you have lower balance the longer you’ll have smaller amount of
interest going out okay so this is the key this is one other key a second
pillar so you know you can call it that to understanding why he laughs are
better okay so let’s go ahead and show you guys the actual strategy this is my
last sheet of paper so I better do a good job all right so what we’re doing
is there’s really two ways to skin a cat here okay there’s two ways to do this
strategy I’m gonna show you guys one way okay like I mentioned earlier I’m gonna
show you guys the full illustration of this method and in a link that I’m going
to put down below at the end of this video so let’s say back to the example
$100,000 mortgage $100,000 balance okay this is a mortgage okay what we’re doing is we’re gonna go
ahead and open up a home equity line of credit so obviously this is gonna
require a little bit of equity to have so let’s say we have we were able to
raise or I should say and open a twenty five thousand dollar limit HELOC so what
we’re doing here is some people might say we just got another twenty five
thousand dollar loan that is not the case here guys so if you have this is
like getting a twenty five thousand dollar credit card we didn’t get any
more alone so what we’re doing is we’re taking that twenty five thousand dollar
credit credit line that we have with the HELOC and we’re making a principal
payment principal payment of $25,000 so now our ending balance is gonna be
seventy five thousand dollar balance here and this is gonna be a twenty-five
thousand dollar balance so seventy five thousand plus twenty five thousand we
still have hundred thousand dollar dollar balance in terms of debt okay we
don’t we didn’t incur any more debt all right a lot of a lot of people seem to
confuse that HELOC they think it’s another mortgage or equity loan product
it’s not okay so we we take in the principal balance and and and put it
here does that make sense and what we’re gonna do here from now is we’re still
going to continue to make our mobile payment every single month okay we can’t
forget that all right unless we want a foreclosure which we don’t want what
we’re doing here is that we’re gonna take our entire income okay so you guys
think I’m gonna be crazy here let’s see our we have our income our monthly
income is five thousand dollar income and make a principal payment against the
HELOC so our balance now is twenty thousand dollar balance and we still have a $75,000 balance here
does that make sense but here’s a trick guys out of this twenty twenty thousand
dollar balance we still have expenses every month
don’t wait right we have kids we gotta pay for diapers right we have to pay for
groceries so what we’re doing is we’re paying you know groceries here right
groceries we’re paying for kids expense all right we’re paying we’re still
paying our mortgages when we our mortgage monthly monthly mortgage right
we’re paying for other bills but we know that this all of this is not gonna
happen like right away next day so remember our average daily interest
balance concept right we’re not gonna go and deposit five thousand dollars on
Monday and next day on Tuesday we’re not gonna incur forty five forty five
hundred dollars of of expenses it’s gonna happen you know it’s gonna spread
out right it’s gonna be hundred dollars here 105 hundred dollars there $700 next
week so between I’m gonna do my best to explain this part here so week one we
have let’s say we spent five hundred dollars on groceries that means we have
a new balance of twenty thousand five hundred dollars on HELOC right but our
total balance is twenty thousand five hundred plus seventy five thousand
balance that comes to ninety five five hundred total debt does that make sense
now guess what guys using it knowing what we know about average daily balance
we’re getting up our interest is getting applied on twenty thousand five hundred
dollars not twenty five thousand dollars of an imbalance so even if we do have
I’d say a seven percent Interest okay which is usually he laps are higher than
mortgage interest that 7% interest is now getting applied to twenty thousand
five hundred dollars instead of twenty five thousand dollar balance so if this
was a mortgage balance of ninety five thousand five hundred
we just saved a whole crap ton of interest around right right there Plus
that $20,000 principle payment we did or $25,000 principle payment we did on the
mortgage we not only we saved interest there but we also saved like close to
man had to say about five to seven years on that single $25,000 payment
probably be more I might be even be confident to say 10 years we just saved
10 years of that mortgage the mortgage does that make sense guys say in week 2
we spent additional $2,000 on whatever expenses you may have you know groceries
kids you know they all add up right so at the end the total balance now
including the mortgage balance and the HELOC balance is give me ninety seven
thousand and five hundred dollars so essentially our he life is now becoming
a checking account right nothing has changed right we’re still making the
same expense the same income now the one thing that I forgot to mention is that
you do need to have leftover money at the end to have the HELOC balance come
down as well they know the principal balance of the HELOC right in other
cases that you should not be spending more money than what you’re making so if
you are if the expenses it let’s say is $4,500
that $500 is what’s bringing down the balance so over time that HELOC balance
is gonna come down zero all right it’s gonna come back to zero the balance and
but again we still have that limit we’re gonna take another $25,000 and bring
that $75,000 let’s say you know over time we’re gonna have balance come down
in $60,000 anyways because we’ve been making that mortgage payment right over
time so by now you know what by the time this becomes zero right this would have
come down as well to $60,000 so now if you take another $25,000
principle payment against the mortgage we’re gonna be back down to $35,000 you
guys see that’s gonna probably chop off another ten years does that make sense
guys right you can you guys see how quickly we can pay off your mortgage
using things to the average day balance right and we’re chopping this down way
way way quicker so we’re doing is this is interphase
shit and converting it to what’s efficient you can save so much money
more money on this side then letting it sit on a schedule and having it pay
every single month now some people will argue with me and saying Sam why don’t
we just take the extra money that you you have you know in this case five
hundred dollars and just make an extra payment on that mortgage well guys that
defeats the purpose of having lower lower average daily balance in this case
when we brought the five when we introduced the idea of $5,000 income
principle payments against the HELOC we brought the average daily balance from
balance from twenty five thousand to twenty thousand right and like I
mentioned you’re not gonna be spending up that forty five hundred dollars worth
expenses the next day right you can be spending hundred dollars here one
hundred five hundred dollars there two thousand dollars you know next week so
between those spending you’re saving that interest just like our earlier
micro example Wednesday into Thursday between those two you know between your
spendings that’s where you’re gonna save the interest right we’re cutting the
mortgage balance from back end instead of front end if that makes sense
so guys if you guys need an actual illustration I do have another link I’m
gonna put it down below right underneath underneath the video if you need a
real-life example if you need real figures I have actually made a longer
video about 30 minutes with actual spreadsheets
I made an actual example with real interest rate current market rate I’m
going to show you how the strategy actually works on an excel sheet the
math does not lie my numbers don’t lie I’m gonna show you in an Excel
spreadsheet how this strategy actually works in number sense I know I explained
it in a very conceptual way you know I’ve made a really quick diagram but if
you guys are like like me and you’re a numbers person you’re very analytical if
you guys want to actually see the real number behind this you know this this
concept I’m going to show you it’s called chop my mortgage calm so I’m
gonna write this sooner there you go I’m running out of papers
so I’m gonna write it right here so go to a chop
Oh chop my go to that link guys have emojis calm I’m gonna also put
it you know underneath this video you can also look in the link description
box if you’re watching this on YouTube I’m gonna give you guys real live
illustration also because I’m a real estate investor I want to show you guys
how to use this strategy also on rental properties so you guys can pay off your
rental properties and I will also show you guys on ideas on how to take this
HELOC strategy the velocity banking strategy and turn it into an income
strategy isn’t that cool so what you thought was it was a strategy to pay off
your mortgage quicker I’m gonna also show you guys how to use the this this
method here to also increase your monthly income so if you guys are
interested in in saving your same your time on your mortgage payment if you
guys are interested in you know paying 66% less on interest you guys are
interested in possibly and potentially doubling your income using this strategy
go to chapman mortgage comm i’m going to show you guys some real-life examples
plus i’m gonna give you guys an opportunity to interact with me on a
phone or skype and you know we could chat on how you can take this this
illustration this concept and apply and you’re in your own life so go to chop my
moves calm i will see you guys there i will be waiting and and i’ll see you in
the next video alright take care now

100 comments on “How to Pay Off your Mortgage in 5 Years”

  1. The Kwak Brothers says:


  2. Ray Grant says:

    In less that two months all mortgages may disappear all on their own. Under the old system all of your mortgages were illegal For years banks have been lending money they don't possess. That has always been illegal. The same with the IRS; They are not a government agency and haven't had any real authority to collect our money. The list goes on and on!

  3. Hariharaprasad Natarajamani says:

    bad advice.

  4. Andreea Shaw says:

    So is not enough that we have a mortgage we need a loan too =)))

  5. Franky Shoman says:

    Too full of your self, go straight to the point with explanations. Too confusing n lacking of major informations

  6. CTSpeed413 says:

    LOL at Arnold popping up with EXACTLY what I was thinking!!! 😆😆😆😂😂😂

  7. Oscar Gonzalo R. Pino G. says:

    you are truly BAD on to explain.

  8. eberdt gerdts says:

    I think you lost 6k viewers.

  9. artport7 says:

    I think you are confused on the HELOC interest … the way you explained it, it looks like you think that the bank charges less interest based on how much you borrow from your equity line… sounds like you said if you take it all and apply it to the principle amount on your mortgage, then pay 5,000 back to the equity line, you only have to pay interest on the 5,000, rather than the 20,000 you still owe… You think the interest charged is based on the average daily balance available rather than the average daily balance owed.. That's wrong…and also, the interest rate of a HELOC is always higher than the mortgage rate.

  10. Victor Rodriguez says:

    Please don't take the advice I'm giving you…. LMAO!!

  11. Rigoberto Mariscal says:

    Step 1: buy a mobile home for less than 50k
    Step 2: Put all your money towards the mortgage.

    Step 3: eat top rammen until the mortgage is fully paid.

  12. Star Path Academy says:

    mortgage is fixed. eventually inflation will eat it away. basically you are paying the same amount but the same amount is becoming less and less actual money. if you can get 4-5% which is sort of the inflation rate you are basically winning. ASLO will you really stay 30 years in that house?

  13. glovilla311 says:

    If I understand it right, the $5K income will be paid towards the HELOC. Where are people going to get the payment towards the mortgage and the bills and other expenses? It's all going to the HELOC payment. Please explain. Thanks.

  14. Francisco Valdés says:

    "Principle"? Really?

  15. DollyLama says:

    So, the HELOC is NOT compound interest???

  16. Joe says:

    In principle, the original sum of money borrowed in a loan is spelled P-R-I-N-C-I-P-A-L.

  17. [T]urboTax Support Phone Number says:

    Great video

  18. lovenpeace says:

    this do not work i had this and you have access to lots of money and always short of income you will be always in debt because you keep writing checks and spend money until you reach your limit in rather have fix mortgage and pay extra when i have extra.

  19. T Oadaly says:

    Paid our first house off in 7 years. 1st, saved up enough of a down payment not to have to pay PMI – that was hard, but we did it. 2nd, bought the least expensive house we were willing to live in. It was in a good neighborhood and in good condition, not a dump, but was small, and not in the most desirable part of town nor extravagant in any way. 3rd, we got a 20 year loan, not a 30. In hindsight, I should have gotten a 10. You pay lower interest rates on shorter loans. And because it was quite a bit less than what all the realtors tell you to buy for your income, we had plenty of left over money each month, which we put toward paying off extra principal instead of blowing it on stupid stuff. We lived in it mortgage free for another 11 years. I probably could have paid it off in 5 years, but didn't even have that as a goal. It just wasn't hard, because of the up-front decisions we made.

  20. 60sMark909 says:

    Surely, you are well aware of the ironic implications of your name. LOL My doctor's name is Paine, so it's kind of the same, so I'm not try'n to cast any blame, I'm just say'n. / "Refinance", yep, thats what we did, dumb, dumb, dumb. And really, the taxes took the payments back up anyway. I'm listening , please continue. Oh, by the way , I'm now unemployed. What a joke it all is.

  21. Denise Moore says:

    When you mortgage and make payments on the loan, does the loan interest for the morgage stay the same until the loan is passed in full

  22. Glorie Grace Malaggay says:

    So u need to pay off the heloc first?how about whatever u got from the heloc u paid it back to the mortgage to keep paying the principal faster?TIA

  23. slimydick23 says:

    Don't waste your time watching the video. Let me explain… first 15 minutes is a remedial lesson in interest computation, if you own a house, you got the truth in lending disclosure and your monthly statements continue to drive this point home…. the example is get a HELOC at 7% APR and MAX IT OUT IMMEDIATELY and pay the full credit limit to your mortgage AT 5% APR and then pay every penny of every paycheck to your HELOC account then pay for all daily expenses/bills out of your HELOC line of credit, in the FINAL SECONDS of the video it is explained that due to AVERAGE DAILY COMPUTATION OF BALANCE that makes it better to have a balance on 7% rather than 5%. What the video fails to tell you is that MORTGAGES ALSO USE AVERAGE DAILY BALANCE METHOD AND THEY DO IT AT A LOWER APR!!!! JUST PAY EXTRA TOWARDS THE PRINCIPLE OF YOUR MORTGAGE AS OFTEN AS YOU CAN. No need to be slick no need for HELOC, it's not rocket science… pay towards the lowest APR account and go about your day.

  24. David DM says:

    So when should one apply this technique? For example we bought our at $295K, its worth 315. Should we apply this now? or get our LTV lower first?? Thanks

  25. The Kwak Brothers says:

    Here is the New Version of the video:

  26. The Kwak Brothers says:

    Here is the New Version of the video:

  27. The Kwak Brothers says:

    Here is the New Version of the video:

  28. Iris lol says:

    Trump rob you . . . . .

  29. Proper way to live by giving says:

    1 Corinthians 13: 3-7 If I give all I possess to the poor and give over my body to hardship that I may boas, but do not have love, I gain nothing. Love is patient, love is kind. It does not envy, it does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres.

  30. seonlyang says:

    I have a house. the value is 370000 and balance left about 230000. What if I am only qualified for 10,000 heloc. Does this stratge still work and help me to pay off the mortgage faster or amount of heloc is matter.

  31. [T]urboTax Support Phone Number says:

    Thanks for sharing this video

  32. Roberta Lesneski says:

    Tax evasion can be rectified tax shelters

  33. Vaidas Lukosius says:

    This does not make sense and you need math help.

  34. Tootsie Clarke says:

    Thank u

  35. Angel Salas says:

    You say you're a nerd but you can't figure out that it's principal not principle

  36. Qing Lin says:


  37. John Karidis says:

    Watched until 14:30 and Im over it. You could said all that in 2 mins and still none of it is worth listening to

  38. Bhavin Parekh says:

    quak duck go…..don bait

  39. J Oh says:

    you failed to account for this little thing called INTEREST…. banks gonna get their money back make no mistake

  40. Wilkes Butler says:

    If you use the line of credit to pay the mortgage down, you've used up your line of credit and you owe the HELOC $25K. How can you say you have a $20K balance by just paying on the HELOC only $5K? You would OWE $20, not have a balance of $20K.

  41. Maia Caasi says:

    I would have watched it but why do you call principal, principle?

  42. Jason Cheshire says:

    Let’s see it in an excel spreadsheet… it would show everything correctly. You’re trying to explain a very easy but hard to track formula and by saying, “ probably 7 years, no, probably 10 years” makes it look silly:

  43. asmoov says:

    Did you have a mortgage

  44. Jeff Silverberg says:

    Why does it take 25 minutes to explain this? Just seems way too long.

  45. Chris Sambrook says:

    5% WOW! I hope that's totally made up and not representative of rates in the USA. In the UK my mortgage interest is 2% and I overpay by more than 20% of the regular payment each month. Throw as much money at it early doors as it saves you interest down the line. Remortgage when your fixed term ends and use an advisor to get you better rates. It's worth the fees. As you gain more equity over time you get access to lower interest mortgages. There are overpayment calculators on line that show how many years you can take off and how much interest you could save.

  46. Jayden Hoskins says:

    Con man, you are taking on a second mortgage at a higher interest rate. You would now have to make two separate mortgage payments. You would be increasing the interest paid to the bank or banks. Also the rates for the HELOC are adjustable rates.

  47. End times says:

    How about the 7K closing cost you have to pay for taking heloc?

  48. Ronnie B-Good says:

    I see it. Brilliant. I think. It's the way that the principle is reduced and interest applied between a LOC and a mortgage that makes the difference. Assume one can pay off a $24,000 LOC (used against the principle on the long mortgage) in 2 years at a rate of $1,000 per month plus interest – the total interest on that at say a 4.5% daily compounded rate would be about $1150 for the two years whereas paying off that same $24,000 over 30 years would include over $12,000 in interest at just a 3% annually compounded rate, a 50% lower rate. As you say it may need some review to fully grasp the concept, run realistic numbers etc., and it would certainly require paying down the heloc at a decent clip so as not to just be having a higher interest portion of your mortgage, perhaps all one's RSP contributions would have to be contributed to the heloc in their stead for example, assuming there is no new income supplement to come up with the extra cash. Running a positive balance in my bank account doesn't usually happen either though that is a good way to slightly reduce the interest on the heloc by having that as your bank account and not simply running it at the full starting balance forever. I can imagine that the banks will make the same money either way and have taken this and people's habits all into account, but with diligence I can see this working as a strategy. Perhaps the same end is accomplished however by simply saving up and making that lump sum payment that many mortgages allow periodically, such an annually, that too would knock down ones principle in good chunks just like the heloc fund transfer, using the same funds that would have gone into paying down the heloc but applying them directly against the mortgage? I haven't run any numbers but would imagine that those extra annual payments coming off the principal would also shed many years off the original mortgage with perhaps the same result, it's all a matter of paying more towards one's mortgage than before, sort of like making larger mortgage payments. I'm going to trust that you have run through this with real numbers enough times to know what you're saying is correct but I'd like to see it done with real numbers which don't assume one has $5,000 in the bank all the time normally (most of us pay bills as soon as the money comes in leaving a near zero balance) and comparing the results between this concept and annual lump sum payments allowed against the mortgage principal using the same money one pays off the higher interest rate heloc with, which in my example would be $12,000 per year, saved with interest paid to me rather than making payments with higher interest to the bank than that of the mortgage.

  49. Jason Vatier says:

    When the tide goes out you can see who is skinny dipping. How about have a nice size down payment and pay on the principal. Short cuts will always get you in trouble

  50. Kenneth Clark says:

    sounds like he is making payments every week…
    say 500$ a week

  51. Chris Cunnane says:

    this is simpleton crap

  52. baltimoresbabyxoxo says:

    If you apply your income tax and 2 extra pay days every year to just the principal, you can cut your 30 year mortgage in half. Simple as that!

  53. Sam says:

    What about sheloc

  54. Quality Transportation says:

    Some HELOCs, however, require that the entire balance be repaid at the end of the draw period, so the borrower must refinance at that point.

    P.S is that’s the common thing with HELOCs?

  55. Sweetpotato Johnson says:

    Pay full mortgage every week instead of every month. Easy.

  56. Sweetpotato Johnson says:

    Lots of BS filler in this video. Get to the point.

  57. Richard Lynch says:

    Does it require money?…

  58. Mandown 4320 says:

    Got it but I got a headache, I use a little different method but quite similar. Good credit have perks strive to get good credit.

  59. Nate Carnes says:

    It is an interesting concept. I know that you struggled with spelling just a little bit. To save you some embarrassment or ridicule, please know that you are referring to paying a "principal", not a "principle" which is a moral construct that cannot be paid (unless you are paying attention).

  60. Oksana Filatov says:

    Totally confusing… none of the numbers are accurate… when talking about numbers, don’t give the “maybe “ number! Do your math beforehand !👎🏻

  61. Johanna Davis says:

    I am about 15 years into a 30 year mortgage
    Will I be able to apply this to my current standing?

  62. Kristibild EOOD says:

    Bla Bla Bla! This takes 5 min not 25 to be explained! And on the end you’ve said nothing!

  63. 67stang says:

    Hahahahah dislike
    Description says pay your mortgage in 5 years hahahahhah in hes math says you cut 10 years 👎. Here in ca you can't not find a house for 100k housrs are expensive over 300k

  64. Helen Rodriguez says:

    Every mortgage lender offers heloc?

  65. Killa Kable says:

    The more I see this video, the more I see it clearer.

  66. The Phantom says:

    "Principal is a noun and adjective with specialized meanings in finance and law but most commonly used to refer to someone in a position of authority or high prominence. Principle is only a noun and refers to a natural, moral, legal rule or standard. "

  67. The Phantom says:

    Moving $25k to a much higher rate of interest then paying it with all your income to gain a few days until you add back to the debt to pay your bills makes little sense. Why not take out only the amount to pay your bills on the HELOC, and skip taking the $25k, and use the funds to pay towards the mortgage?

  68. Twerkn says:

    Quack bros is right

  69. Brian Medeiros says:

    Listen to Dave Ramsey and don’t do this junk. I’ve got 4 years left on a 9 year plan.

  70. Gregg Gusta says:

    Right out of the gate, can't you even do the math on your simple freaking example ahead of shooting the video?????

    $100k at 5% for 30 yrs is $537, you're short by 33% right out of the gate.

    Folks if you borrowed $100k and want to pay it off in five years you're going to have to come up with at least 20k PLUS THE INTEREST EACH YEAR. There's just no two ways around it. But you probably borrowed a lot more than $100 k.

    So let's say 200k. That's 40k not even factoring in interest. That's $3700 per month EVERY MONTH NO MONTHS OFF. In order to pay off the loan in five years.


    Can you swing that if you owe 200k?


    I'm shocked.

    My suggestion: buy less house, buy less car, stop worrying about the fucking Joneses they hate you anyways.

    If you are close to 4 or under 4% on a 30 just pay as much as you can to principal in addition to your monthly payment OR on your highest interest debt until it's zero then the next highest and then the next and stop living beyond your means. If you have to cut up your credit cards then do it.

  71. T GS says:

    Thank you I have told my husband this for years, awesome

  72. ERICK and The Ourbacks says:

    What would Dave Ramsey do

  73. John R says:

    I've seen several videos on this. You guys seemed to copy each other. With this advice, people will fail like this. You NEVER pull all your HELOC at a time. You use this strategy but a little at a time. Otherwise you will trap yourself. If you only have $100 of discretionary income and your interest payment on the HELOC is $100 or more, you just locked yourself into an ever increasing debt. You are only supposed to use no more than a 1/3 of your HELOC. I would say not even that much at a time. Stay within $10k an no more of HELOC debt at a time unless you have a lot of discretionary income or have a strategy to open up more discretionary income. Start with small withdrawals and then work up as you see fit.

  74. Frank Arango says:


  75. Eric Claey says:

    I paid off my mortgage in 1 1/2 years… and I owed about $25,000 still on my home. I felt like I was halfway to retirement when I paid it off, and I was 37 years old at the time. My wife and I have been always middle-class, if not lower middle-class. Anyone can do it. Also, get rid of the credit cards.

  76. Richie Hodge says:

    Why not just make additional principal payments to your mortgage when you have extra money? Same outcome.

  77. Nate Nuks says:

    Does this work in New Zealand?

  78. RexyFan says:

    I currently have an offset account set up with an investment property with negative gearing. I’m thinking about selling my investment because it’s just not set up correctly to be self contained.

    Do all banks offer this HELOC product ? I’m in Australia.

    I want to get rid of my credit card and get this heloc method in future.

  79. the new deal says:

    He's saving on paper to pay for the Heloc lol

  80. Kevin Cody says:


  81. Rick Harks says:

    the banks profit from you taking the life insurance,, by doubling up you mortage every month you will pay it off in half the time. we had a 160K and 11 years later were almost finished with paying it off, less than a year left. we dropped the life insurance off 3 years ago,, we pay 900 every 2 weeks,,and our interest rate is 2.75%

  82. Pawel Wisniewski says:

    So if you have 400k mortgage you need $100k proportionally , that will cost you additional 7k a year in heloc interest only .

  83. nantucketjeep says:


  84. Jamaican empress says:

    Can you just pay off your principle?

  85. Bt .Snipe says:

    4:59 Uhm, I was able to refinance at a lower rate and keep my same schedule of amortization ;didn't have to start over. Some people don't mind paying the extra mortgage interest though, I had a friend who (back when interest rates were double digits) would deduct his mortgage interest from taxes and got enough from his tax returns to pay his mortgage(P&I) for about 10 months.

  86. Leta Dean says:

    This is a joke, right???? Taking on a second mortgage at a higher interest rate increases your debt. Didn't you know that a home equity line of credit is a credit card the size of your house!! Very Dumb. Just make bigger payments each month towards your mortgage and you will whittle away the life of your loan sooner. Swallow your pride and drive an ugly old car instead of having car payments. Whatever you have to do. This will free up extra money towards the principal on your house. Get a side job twice a week and put all of that income towards getting out of debt. Put all your tax refund into an extra payment. Lots of ways to do this. But never ever take on more debt to pay off your house.

  87. ptooti says:

    small detail how do you get home equity when you have zero equity in your home ? looks like a clowns juggling act to me just hammer the principal down each side of the mortgage renewal date.

  88. Zawya Werkey says:

    I would have liked to hear the comparison between the two rather than telling me your preference. Because, I don't know the agenda behind your video.

  89. Jennifer scarlata says:

    This is a very funny idea that you can make money by making more debt. I'm a bit confuse about your strategy I will just continue with credit streamers mortgage plan I have just a few months remaining.

  90. NotYour YesMan says:

    So basically begin to use your HELOC like a prepaid credit card per se!! This is really smart as hell!! Honestly, a mortgage is the bulk of your bills👍🏽

  91. Larry Leung says:

    How do you qualify for a HELOC if hypothetically you want to buy a $500,000.00 property with say $100,000.00 down? Typically a buyer would apply for a mortgage for $400,000.00.

  92. †ANGÉ|† says:

    15:14 "…two ways to skin a cat here…" bro, hahaha. funny guy, Thanks for the quick info!

  93. Doyle Fam says:

    Hey guys any small YouTubers wanna help each other out lmk 🎃🙂

  94. Dick. C. Head says:

    As im sure ur aware that the word MORTGAGE is derived from the french and translates as DEATH CONTRACT. What do this tell you? Rich/San Jose

  95. Molly Mpshe says:

    What happens if you decide not to spend any money from your Heloc Account. For example, if you just decide to leave the $25k on your Heloc without using it to pay for any necessities?

  96. Stephen P says:

    HELOC is a form of DEBT, it is not a bank account or asset. Like they said, it is like a CREDIT CARD, i.e. a BAD IDEA. What’s going to happen? They will charge you interest, of course! (and don’t be fooled by the glowing talk of “average daily balance,” yes, of course you can tweak with the cash flow and balance a bit, but small potatoes, do the math yourself: $97,500 with a good portion of it at 7% interest (and the rest at, say, 4%), is way worse than 4% interest on the whole $100,000. What else could happen? Your lender could foreclose on the HELOC early, or jack up the interest rate (say inflation rises like it did in the 80s, would 20% interest on $97,500 sound attractive)? Just pay the frickin mortgage like normal. You’ll pay it off faster (since you can’t make lower payments like you can with a HELOC or credit card, leading to more debt problems and interest than otherwise would be the case with disciplined payback), and with WAY less risk to you and your family. Unlike these quacks, I actually have a 4-year finance degree and have been a licensed independent advisor, and am intimately familiar with how these things work. You can’t borrow your way out of debt; the only people who think you can are running for congress. Run!

  97. Ellenor Bovay says:

    Thats not going to work. You borrowed 25K at a higher rate, to pay off a debt at a lower rate. Then you magically pulled 5K out of the air and reduced the 25K debt to 20K debt. Then you BS'd us about the kids and the groceries, which has nothing to do with any of this, and Viola! You came up with a bunch of BS. If you just put as much as you can into your mortgage, the interest drops accordingly and the principle paid goes up. Plus the mortgage is tax deductible. I don't think a HELOC is tax deductible.

  98. Chris Fraijo says:

    Velocity of money and debt roll up is a more effective way of paying off your mortgage. Having a HELOC is adding more debt and the variable interest rate could mean a substantial increase in payment. The idea is to roll over debt into a cash account earning interest and using that investment as a way of paying off your mortgage, all a while, continuing to make the same payments into the new investment account. Nice concept guys, but very impractical and not suitable for many individuals.

  99. Pong Bunnalai says:

    Higher risk higher return. This will work if you can stick with paying higher monthly payment (mortgage+heloc) and do not factoring in lose of income risk.

  100. J NO says:

    Its a cool idea.
    Simply reducing the amount time money is exposed to interest.
    The most complex part is the fact that the Heloc is likely double the interest of the fixed rate mortgage.
    The player will need to craft an income and expense schedule to minimize time exposure enough to offset the increase in yearly APR. Many lenders now offer payment date adjustment to assist.
    If done incorrectly though, the player pays more interest.
    Done right, the player pays less interest.
    There are similar game strategies with 0% credit cards

    Money is a game. One of many things parents need to teach their children.

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