Any Velocity Banking advocates on here?

Nope. Why not just put your extra income each month toward the mortgage, if you want it paid off early. I’m fine w mine at 3%, no worries about paying it off sooner than the remaining 12 yrs. My extra cash is going into investments and retirement accounts, not paying down the mortgage.

Well this whole topic fascinated me that I spent way too many hours messing around with spreadsheets, reading boggleheads and bigger pockets forums, and eventually ended up learning that Clayton Morris, the former Fox and Friends weekends host who is a big advocate of this, seems to have ripped off hundreds if not thousands of small time investors in some turnkey/rehab rental property scheme. A true sleazeball.

This has also made me appreciate Dave Ramsey and his followers approaches to paying down debt much more, because even if I don’t believe it’s always best, at least the process is just basic and transparent logic and math (even if the math suggests putting it elsewhere).

Anyways, after reading people advocate for both sides of equation, I’m more convinced than before that this is not anything than a unnecessarily complex method to do what Dave and many others would recommend: paying extra on a mortgage. And just like that and any other method, there will be specific situations where it works better than others, but overall you’re going to save save about the same and pay it off about as fast if it goes as planned. But with the added risk with more debt, higher rates that can rise much more, specific fees that banks can impose (close an account to early), overexposure, and the legal exposure of a 2nd mortgage, the downside risk is FAR greater than the upside, even if both are unlikely.

I also learned that this scheme, which has taken on many names and many scams to sell it (some MLM’s) was quite popular in the early 2000’s, and was originally models off of this “Australian Method” which is occasionally referenced by advocates to this day.

What is interesting about that, especially from those who are still mentioning it, is that the Australian government had to shut down a bunch of people pushing it and scamming people BACK IN 2004.

The Sydney Morning Herald: End of the Line

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The Australian Securities and Investment Commission (ASIC) has shut down loan calculators on more than 100 Australian websites in another move against line-of-credit home loans that use false advertising to suck in borrowers.

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quote:

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"Brokers offer them as 'mortgage reduction services' and that's a total hoax. But some mainstream financial services firms have also been profiting from the fact that consumers are mislead over these loans."

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On line-of-credit loans, the guidelines state: "It is misleading to say that a line-of-credit or offset account product can be paid off more quickly than a a standard product if this result can only be achieved by making larger or more frequent payments.

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Now there are probably some minor differences here and there between their lending rules and calculations, and the advocates have changed their ways of advertising it (like this whole checking account concept, which is just paying back the loan) but the principle is still the same.

Now maybe I’m something, but I suggest checking out Reddit, Bogleheads, and Bigger Pockets, etc., because they have far more knowledgeable people than me discussing it. However, they seem to share the same conclusions, by and large, especially Bogleheads. And those refuting them, seem to always resort back to those same talking points (simple interest, it’s a checking account, etc.), but most don’t seem to be able to explain how that is any functionally different than paying down the loan. It reminds me of those who harp how decentralization in crypto/blockchain is going to change the world, but fail to explain why it’s so much better and why the world even wants it for the most part.

I sure wrote a lot here, but I enjoyed learning about it. I would recommend just paying off your mortgage as quickly as you feasibly without taking on more debt (unless it’s an amazing offer or something with no catches) if paying it off is that important. And you always have the option of opening a line of credit if that safety net would give even more peace of mind (without any catches). You seem to be in a good place financially so I think you’ll be good regardless.