by Lilian Okado

Created on: November 27, 2008

With current economic and financial crisis facing global markets, homeowners are looking into ways to pay off their mortgages quicker without digging deeper into their pockets. Words like mortgage acceleration are being thrown around and more people are wondering how to benefit from it. A Mortgage accelerator is just a fancy word but one that shows you how to paying off your mortgage early and without having to spend an extra dime or lowering your living expenses. Once you understand this simple definition follows the question how to do it?

It is common knowledge that banks are in the business of making money and the way they do this is by charging you interest on loans. But there are ways you can use this aspect of interest to turn the tables around and in your favour whilst helping you maximize on your equity.

Firstly, there are the people who have 25 year mortgages and who decide to pay it off slowly in those 25 years and there are the ones who do a little restructuring to their mortgage payment plans. Instead of depositing your usual monthly pay check into your checking account that earns you little or no interest you could bank it into an interest generating account or find a way to link your checking account to a mortgage account. As a result you monthly pay check will earn similar interest to that of your mortgage in turn you will have more money in your mortgage account and though you are still making your usual monthly payments, your principle mortgage amount is reducing.

And this is where HELOC (Home Equity Line of Credit) loans come in; these are basically revolving accounts that work somewhat like a credit card and can be used to help you with refinancing. You simply borrow against the equity of your home up to a certain amount. And as mentioned earlier you can attach your loans, credit card debt, etc. to it.

Let us say for example you have bonds or other similar assets that are earning less interest than your mortgage is, a good idea would be to transfer these to your mortgage account. What of the numerous other loans you have taken like your car loan or credit card debt, these can also be transferred to your mortgage account and as you continue your monthly payments you simultaneously reduce your mortgage amortization. By making deposits of your disposable monthly income to your mortgage balance, you will pay off your mortgage more quickly than you would have envisioned.

Even better, you still have access to the cash in your mortgage account. If you have a bad month you can easily withdraw the cash you need with no hassles. (This can never happen with a standard mortgage) We all know that refinancing a home loan can actually be very expensive. Such mortgage accelerators are simply flexible financial accelerators that help you beat the banks at their game.

In addition HELOC loans help decrease the tax you pay because the loan interest you have to pay is tax deductible, hence more money in your pocket that you can channel into your mortgage account.

When all is said and done, it isimportant to note that everything comes with a risk and so does a mortgage accelerator. Not only does this home ownershipaccelerator increase your liquidity almost overnight, but it can encourage you to spend more than you can really afford. However with a certain amount of discipline and money management skills your risks are greatly reduced.

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