Line of Credit to Pay Down Mortgage

[Mike Lambert]

I've been researching using Lines of Credit to pay down a mortgage (this one is for my primary home). I'm interested to get feedback. Please shoot holes in my plan and let me know if you have better ideas.

Hypothetical deets (all numbers are rounded):

30-yr Mortgage: $280k @ 4.8%

Dual net monthly income: $9k

Total monthly expenses: $5k (includes mortgage payment)

(Cash Flow: $4k)

Plan is to use a Line of Credit (18% APR) and pump $15k into the mortgage every 6 months (conservatively paid off in month 4).

Using this approach (per the amortization schedule calculator I have) I will pay off the mortgage in less than 7 years.

I will pay around $11k in Credit Line interest (approx. $700 each 6-month iteration), but will reduce my mortgage interest by over $200k!

I look forward to hearing from you guys (especially the accountants!) Fire away!

Mike