How Mark and Sarah paid off their £320,000 mortgage in just 3.5 years by depositing their entire income into their HELOC
This page presents a hypothetical case study for educational purposes only. The content is not financial advice. While based on mathematical principles, results may vary based on individual circumstances.
Always consult with qualified financial professionals regarding your specific situation before making any financial decisions.
For most UK homeowners, a mortgage is a 25-30 year commitment that costs hundreds of thousands in interest.
But what if there was a way to pay it off in just a few years, potentially saving over £300,000 in interest?
This is the story of how one couple did exactly that using a strategy called velocity banking.
Traditional 30-year mortgage
A hardworking couple determined to become mortgage-free as quickly as possible.
Monthly surplus of £2,600 - This is the engine that powers the entire strategy.
With 52% of their income available after expenses, Mark and Sarah had significant financial leverage to accelerate their mortgage payoff.
After researching alternative mortgage repayment strategies, Mark and Sarah discovered velocity banking. With their initial equity of £30,000, they were able to secure a Home Equity Line of Credit (HELOC) with an 80% loan-to-value ratio, giving them access to £24,000.
Here's how they implemented the velocity banking strategy through a series of 6-month cycles, ultimately paying off their mortgage in just 3.5 years instead of 30.
The power of velocity banking comes from depositing their entire income untouched into the HELOC, immediately reducing the balance on which interest is calculated, then only withdrawing what they need for expenses.
Mark and Sarah took their first step by setting up their HELOC and making their first mortgage principal payment:
HELOC interest is calculated daily, so depositing income immediately reduces interest charges.
No idle money sitting in checking accounts - every pound is constantly reducing debt balance.
| Month | Starting Balance | Monthly Surplus | Ending Balance |
|---|---|---|---|
| Month 1 | £24,000 | £2,600 | £21,400 |
| Month 2 | £21,400 | £2,600 | £18,800 |
| Month 3 | £18,800 | £2,600 | £16,200 |
| Month 4 | £16,200 | £2,600 | £13,600 |
| Month 5 | £13,600 | £2,600 | £11,000 |
| Month 6 | £11,000 | £2,600 | £8,400 |
With their increased equity, Mark and Sarah requested a HELOC limit increase:
The timing of their HELOC limit increase request was strategic - they waited until they had:
Low HELOC balance + High equity = Maximum available credit
With their increased HELOC limit, Mark and Sarah:
Mark and Sarah continued depositing their entire income into the HELOC and only withdrawing what they needed for expenses. By the end of the cycle:
With each cycle, Mark and Sarah's lump sum payments grew larger as their equity increased:
| Cycle | Month | Lump Sum Payment | New Mortgage Balance |
|---|---|---|---|
| Cycle 3 | Month 13 | £35,000 | £231,000 |
| Cycle 4 | Month 19 | £40,000 | £191,000 |
| Cycle 5 | Month 25 | £50,000 | £141,000 |
| Cycle 6 | Month 31 | £60,000 | £81,000 |
| Cycle 7 | Month 37 | £70,000 | £11,000 |
| Final | Month 42 | £11,000 | £0 |
Notice how each new HELOC limit increase happened when their equity had grown substantially and their HELOC balance had been paid down. This perfect timing maximized their available credit for making the largest possible principal reductions.
Total Interest Saved: Approximately £360,000
Years of freedom gained
They simply restructured how they used their cash flow
By constantly reducing the principal balance on which interest is calculated
Giving them increasing financial flexibility
Than with traditional payments
While traditional HELOCs are less common in the UK, there are several alternatives that can be used to implement similar strategies:
The same mathematical principles can be applied using these UK-specific products.
Learn More About UK ApplicationsAdapt the strategy to work with available UK mortgage products
While using a HELOC does involve some risk, Mark and Sarah never increased their total debt. They simply restructured it in a way that accelerated payoff. Their total debt (mortgage + HELOC) decreased every month.
The strategy requires discipline to ensure you're consistently reducing your overall debt, not increasing it. For those with good financial habits, the risks are manageable and the rewards substantial.
Interest rate increases are a consideration. However, because the strategy creates significant interest savings through front-loaded principal reductions, moderate rate increases typically don't negate the benefits.
If rates rise substantially, the strategy can be adjusted by:
Results vary based on individual circumstances, including:
The higher your monthly surplus and the fewer restrictions on your mortgage, the better the strategy works. It's particularly effective for mortgages with higher interest rates, as the potential savings are greater.
Velocity banking isn't a magic solution—it's a mathematical strategy based on:
It requires discipline, consistency, and the right financial products. For those who can implement it correctly, the mathematical advantages are real and significant.
A balanced analysis of the advantages and potential drawbacks of velocity banking for UK homeowners.
A step-by-step introduction to understanding and implementing velocity banking concepts.
Try our interactive calculator to see how velocity banking might work with your specific numbers.