Your mortgage
Your extra cash
HELOC assumptions
The three paths
Estimates for education only, not a loan offer or commitment to lend. Assumes your rates and extra cash stay constant unless you change them above. Rates shown are examples. A HELOC is secured by your home.
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How the three paths work
1. Regular payments. You make the scheduled payment until the mortgage is gone. This is the baseline.
2. Extra cash straight to the mortgage. You add your extra cash to the mortgage payment every month as additional principal. No new loan is involved.
3. The HELOC method. You draw a lump sum from a HELOC and pay it against the mortgage principal. Then all of your extra cash goes to the HELOC until it is back to zero, and you repeat. Once the mortgage is gone, the old mortgage payment goes to the HELOC too. If you enter take-home pay, the calculator also models depositing paychecks into the HELOC, which lowers the average balance a little.
What most people find
In most scenarios, paths 2 and 3 finish within a few months of each other. The reason is simple: a HELOC does not create money. The extra cash you send in every month is what pays the house off early, and it does that with or without a HELOC in the middle.
The HELOC method tends to come out a little ahead only when the HELOC rate is close to or below your mortgage rate, or when a large paycheck sits in the line all month. It tends to come out behind when your mortgage rate is low, because you are moving balance from a cheaper loan to a more expensive one.
The risks to weigh
- Variable rate. Most HELOC rates move with the market. Use the stress test above to see what a 1% or 2% increase does.
- The line can be frozen or reduced. A lender can do this if home values fall or your finances change. See HELOC freeze risk.
- It depends on discipline. The method only works if the extra cash really goes to the HELOC every month. An open line of credit is also easy to spend.
- Your home secures both loans. Missed payments on either one put the home at risk.
When a HELOC does make sense
A HELOC is a good tool for the right job: paying off higher-rate debt, funding a renovation, or keeping your low first-mortgage rate while you access equity. If that is your situation, compare it with a refinance in the HELOC vs cash-out refinance calculator, estimate payments with the HELOC payment calculator, or see real customer examples.
Frequently asked questions
Does using a HELOC pay off a mortgage faster?
Only if the extra money going toward the debt each month is what does the work. A HELOC does not create money. In most scenarios, sending the same extra cash straight to the mortgage pays it off about as fast, with less risk. This calculator shows all three paths on your own numbers so you can see the difference.
What is the HELOC payoff method, sometimes called velocity banking?
You draw a lump sum from a HELOC, pay it against your mortgage principal, then send every spare dollar to the HELOC until it is back to zero, and repeat. Some people also run their paycheck through the HELOC so the average balance is a little lower.
What are the risks of the HELOC payoff method?
Most HELOC rates are variable, so the cost can rise. The lender can freeze or reduce the line. The method depends on steady extra cash every month, and a HELOC is secured by your home, so missed payments put the home at risk.
How accurate is this calculator?
The math is exact for the inputs you enter, but it is an estimate. It assumes rates and your extra cash stay constant unless you change them, and the paycheck setting uses a simple average-balance approximation. A licensed lender can check the numbers against a real quote.
Audi Garner · Branch Manager & Mortgage Broker · NMLS #190235 · West Capital Lending NMLS #1566096. This calculator is for general education. It is not financial, tax or legal advice, and it is not a loan offer or commitment to lend. All loans are subject to credit approval and underwriting.