Mortgage Accelerator Loans

This is an article that was sent to me from an author Don Taylor from the web site https://www.scrippsnews.com/biztech. This is an interesting new trend in products offered in mortgage. It is an interesting read I am sure that this will have a substantial impact on loan systems.

See below:

A different type of mortgage, called a "mortgage accelerator" loan, has migrated to the United States. It uses home equity borrowing and the borrower's paycheck to shorten the time until a mortgage is paid off, saving tens of thousands in interest expense.

Not to be confused with a biweekly mortgage loan that shortens a mortgage by paying an extra mortgage payment once a year, the mortgage accelerator loan program is based on an approach common in Australia and the United Kingdom, where borrowers deposit their paychecks into an account that, every month, applies every unspent dime against the mortgage loan balance.

In the United States, the two firms offering these mortgages are Macquarie Mortgages USA, where it is called the Macquarie Asset Manager, and CMG Financial Services, whose offering is called the Home Ownership Accelerator.
The premise is that borrowers finance a new property or refinance existing property using a home equity line of credit, or HELOC. Borrowers then directly deposit their entire paychecks into the HELOC. Monthly expenses, other than mortgage payments, are funded by draws against the line of credit, whether that is by using bill pay, check writing, ATM withdrawals or a credit card tied to the line of credit. Even if you don't wind up making additional principal payments in a month, you still capture some interest savings because your average balance is less than it would have been with a conventional loan.