Mortgage Acceleration, All in One (AIO), pay checking parking?

4 Replies

Lately it seems that a lot of paid education companies, youtube channels, and many other podcasters are talking about these topics of debt, mortgage acceleration using a line of credit, payoff your home in 5-7 years. I figured since I got so many inquiries about it that I'd address some of the most common questions about the strategy:

1) Does this actually work or is a hoax? - Yes, in cases with ideal candidates for the strategy, you can payoff your mortgage in as fast as 5-7 years or 2-3 times quicker than traditional mortgage or principal 

2) Who is the ideal person is this strategy for ? Financially disciplined persons who can save about 20-30% of their gross annual income or more. Typically people who have been interested in the strategy have been higher income folks, real estate investors who like to utilized the BRRR method, self employed & business owners who utilize the strategy to fund their business or want the flexibility.

3) How does it work? It works by utilizing all excess dollars available that typically would not be generating a return, sitting in your checking/savings account to accelerate your freedom/debt free point

4) Is this a strategy, education, or is it a product? Its a strategy and can be implemented on various lines of credit whether residential or commercial, however the best products to utilize this strategy with are the All-In-One (AIO) loan or with commercial lines of credit since they use the purest forms of simple interest. 

5) Can a simply concept of simple interest versus compound interest actually make that much of a difference? Yes, Simple Interest recruits all dollars available in your financial system and gets them to reduce your mortgage balance so that your daily interest calculation is calculated in the purest sense of simple interest (rate / 365 X daily balance at 12:01AM = daily interest)

6) What are the best products to implement this strategy with and can I only implement this with that product only? All-In-One Loan or AIO Loan or commercial lines of credit from local portfolio or commercial banks because of simple interest calculation. Residential HELOC's tend to calculate interest per month X average daily balance (average of all days per month) so this reduces the impact for financiall disciplined folks who routinely spend less than income taken in each month.

7) Wouldnt paying extra with a regular conventional 30 year fixed (Constant payment mortgage - CPM) be the same or better, apples to apples? Yes, this would not make sense but in reality this is generally not possible because if all funds were paid as extra principal contributions comparing both apples to apples each month a person would not be able to pay bills, eat, or cover any unforeseen expenses. A Line of credit or debt acceleration strategy allows a borrower to reduce their daily interest cost by having the benefit of all of their liquid funds recruited towards this effort while simultaneously having access to use the cash only when its needed.

8) Where can I experiment with financial scenarios to see if this can benefit me ? You can go to www.aioloan.com to enter in your current or proposed mortgage scenario to compare it side by side with the AIO loan which will give you an ideal if your financial situation is ideal to benefit from this strategy or not.

What have you heard from this marketed strategy and what do you think about it?

Id be interested in hearing the questions and comments from folks who have implemented and your results.

Best Regards!

There is a big, hairy, audacious argument...I mean thread....on this topic.  You just had to go an open the can of worms again! :D

I find it compelling to have a lender’s perspective on something that many respond “too good to be true,” so thanks for posting @Albert Bui

@Albert Bui

Thanks for sharing.

I was first introduced to this loan 2 years ago. At the presentation it was called a HELOC all in one, or first position HELOC.

My parents used this loan to pay off their house in 4 years. 

I looked into it quite a bit and even sat down with the head of the dept at my local bank but I ended up not doing it. 

Partly because the interest rate would have been 2% higher than my current one. Even though my balance would be less I felt that making extra payments rather than just keeping a lower balance would be better for me.

It's a good way to be able to use the equity in your house, the only issue I had is that my primary residence is the only property I have real usable equity. I made a rule that I am not going to be using my primary residence to invest so it just didn't make sense. 

Originally posted by @Luka Milicevic :

@Albert Bui

Thanks for sharing.

I was first introduced to this loan 2 years ago. At the presentation it was called a HELOC all in one, or first position HELOC.

My parents used this loan to pay off their house in 4 years. 

I looked into it quite a bit and even sat down with the head of the dept at my local bank but I ended up not doing it. 

Partly because the interest rate would have been 2% higher than my current one. Even though my balance would be less I felt that making extra payments rather than just keeping a lower balance would be better for me.

It's a good way to be able to use the equity in your house, the only issue I had is that my primary residence is the only property I have real usable equity. I made a rule that I am not going to be using my primary residence to invest so it just didn't make sense. 

That is some good Feedback Luka, thanks!

the BE rate or break even rate with the AIO can be far higher than the fixed 30 year fixed rate and still pay less interest, but only  in situations where there is significant disposable funds left over each month  (borrower who spends a lot less than they make). For this reason I dont think its a product for most folks so I routinely convince people not to do it unless we can document it makes good sense.