Understanding Mortgage Accelerator Loan Program

Mortgage accelerator loan program is a unique loan clearance program that has been introduced in the U.S. recently. Based on the concept of home equity borrowing, mortgage accelerator loans have been in vogue for several years in the U.K. and Australia.

Mortgage accelerator loan program works on a very simple concept. Here, the borrowers, who have taken credit on their existing property, are required to deposit their monthly paychecks into their credit account. All the monthly expenses, excluding their monthly mortgage payments can be withdrawn from the account through lines of credit. The remaining unspent amount gets deposited against the credit resulting in a lower mortgage balance. One of the advantages of this program is that it saves the interest that needs to be deposited with the principal. As a result, the time taken to pay off the loan is shortened or in other terms accelerated.

However, the monthly mortgage payments during the initial 10 year in a mortgage accelerator loan are interest only payments, making it possible to the borrowers to become financially stable. Later, the borrower is required to make payments towards the principal. Even the line of credit decreases by 1/240 every month till the remaining loan term.

This program is ideal for borrowers who are not financially disciplined. If the borrower does not spend the money by drawing against line of credit, it can be used to pay off the house. Apart from this, an additional benefit that mortgage accelerator offers to borrower is instant cash through line of credit during any financial emergency. This gives the homeowner confidence to become aggressive in paying off his loan and still having ready cash available during the times of emergency.

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