The mortgage industry is always developing new loans and products to mold to consumers’ wants and needs.

A new loan that has been popular overseas is now making its way into the United States’ mortgage market, but only time will tell if it will last.

This new loan concept is called the “mortgage accelerator,” and it combines a variety of different elements to enable a borrower to pay off their loan faster.

A November 2, 2006 article by Don Taylor of Bankrate.com, “‘Mortgage accelerator’ loan comes to U.S.,” discusses the pros and cons of this new product.

“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.”

These loans are very popular in Australia, where over one-third of homeowners use them, and in the United Kingdom, about 25 percent have a loan program like the one mentioned above.

In the United States, this program is very new, and only two firms currently offer a “mortgage accelerator” program. They are Macquarie Mortgages USA where it is called the Macquarie Asset Manager, and CMG Financial Services, where they are calling the loan 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 begin directly depositing 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.”

This program gives the homeowner flexibility in that it gives them access to their cash through the HELOC that is already in place. This is a great option if there is ever a need for some emergency cash.

This helps homeowners to rest assured that they can act aggressively in paying off their loan, while not having to worry about needing cash for a financial emergency.

But while this loan may be good for some, it is definitely not good for everyone, since it trumps paying off your mortgage, which you should never do.

Having a mortgage in place allows you investment opportunities unlike any other avenue. Paying off a mortgage can often times be a huge financial mistake.  Talk to a mortgage coach at LEI Financial to learn how you can make your mortgage work for you.