Finance & Fury Podcast

How can you pay off a mortgage with debt? Velocity banking and Offset accounts This question comes from Tom a podcast listener. He asks “Just wondering if you have ever used Velocity banking at all to pay down debt quicker?” In this article, we will explore what velocity banking is as well as some alternatives to paying off debt with other debt available in Australia. So what is it? And why haven’t we heard about it? It’s a Strategy of Using a Line of Credit (LOC) to pay down principal on a loan. Typically used in the US. How does velocity banking or ‘chunking’ work? The LOC becomes your income and expenses account. You put your pay into it and pay all your expenses from it, including your mortgage repayments. You use the LOC to pay down your loan through “chunking”. What this means is if your income is greater than your expenses, the LOC should build up by the difference every month. If your household income is $8k p.m. and your expenses (inc mortgage) are $6k, the LOC should build back up by $2k p.m. Once t