What Is Velocity Banking Strategy?
Want to pay off your mortgage fast? Velocity banking is a mortgage repayment “strategy” that’s growing in popularity. But does it actually work? We’re going to break down what velocity banking is, look at the pros and cons. But more importantly we’re going to look at who is making money off of this strategy.
Velocity Banking Summary
Overall Rating: 0 / 5
Best Feature: Your may save $40 on your mortgage
Biggest Con: Your debt goes up, pay more in interest, and have to jump through a ton of hoops to make a single mortgage payment.
Recommendation: Do NOT use this strategy, just pay off your mortgage like a normal person WITH YOUR OWN DAMN MONEY.
What Is The Velocity Banking Strategy?
The velocity banking strategy is when you pay off your mortgage quicker, using debt. In theory if you make a large payment on the principle of your mortgage you’ll save money by not paying the interest on your mortgage.
Velocity Banking Pros
Velocity Banking Cons
Should You Use This Strategy?
Listen I’m all for paying off your mortgage faster and saving money on interest. But the velocity banking strategy is just plain stupid. It’s so stupid that yes I’m calling this entire strategy a SCAM.
Why?
Because the people who are pushing and advocating for velocity banking are the ones who own, or are paid by the 3rd party companies that make it possible to pay your mortgage with debt. And the craziest and stupidest part of this whole strategy is that you still have to quickly save the money you put down on your mortgage!
Let’s look at an example. I have a $100,000 left on my mortgage, and I want to make an extra payment of $10,000. Using the velocity banking method you would put that $10,000 on a credit card of line of credit. The 3rd party would then pay your mortgage using that money (minus their fee of course).
Congrats your mortgage is now $90,000 but you now have $10,000 in debt that you are getting charged MORE in interest! You now have to find or save $10,000 within 30 days and put that down on your debt in order to ACTUALLY save money on your mortgage.
Which is why I highly recommend the alternative method to paying your mortgage faster. It’s call save the damn money yourself, then pay it off with cold hard cash! The point is simple, with or without velocity banking you’ll have to come up with $10,000 in cash within 30 days. So why not wait the damn 30 days to get your money and avoid all the headaches and extra fees / risk that velocity banking has!
Remember money can be complex, but wealth is simple. So keep it simple stupid.
Velocity Banking FAQ’s
Velocity Banking Pros
The only pro of velocity banking is that you may be able to save $20 – $40 on your mortgage payments if everything is executed perfectly. Unfortunately that is a BIG if. Which is why velocity banking is mostly filled with cons.
Velocity Banking Cons
There are a lot of cons when it comes to velocity banking. You have to have access to credit cards, line of credits, or HELOC.
But because mortgage lenders will not accept debt to make a mortgage payment, you have to find a third party service that will take your money from your credit and use that to pay your mortgage. Oh ya you also have to pay for that 3rd party service.
The amount of hoops you have to jump through and fees you have to pay is enormous.
Is Velocity Banking Bad?
Yes, velocity banking is a bad strategy when trying to pay off your mortgage quicker. The best case scenario is that you save $20 – $40 on mortgage payments. The worst case scenario is that you end up in MORE debt with HIGHER interest rates than your mortgage. For that reason we highly do NOT recommend using this strategy.
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4.8