Frequently Asked Questions

1. Why doesn’t everyone do this?

I get this question a lot: If this strategy is such a great way to quickly pay off a mortgage and save significant money in the process, then why aren't more people using it?

First, the truth is that around the world there are a lot of people using this strategy to pay off their mortgage. In fact, this method is much more prevalent in the UK and Australia.

Here in the U.S. it is taking longer to catch on for a couple of reasons. For one, it has only been around a few years. But more importantly, banks and lenders do not offer this option. So there is no one in the marketplace sharing this amazing information. Think about it: who is going to tell you about this? Not your CPA, your real estate agent, or your financial advisor and certainly not your banker or mortgage guy. Aside from the fact that the mortgage professionals have an obvious conflict of interest, the truth is that they simply are not aware of, nor do they understand this strategy and how it works. 

This is precisely why I created Designed to Prosper -- to show you that you do have a much better option.

2. Why do banks do this?

Banks want your business. When they lend money out to customers, that loan is an asset on their balance sheet. It is a liability on ours but an asset to the bank. That loan creates a stream of income or deposits for the bank. They are also hoping to capture other collateral business such as checking, savings, brokerage services and credit cards. They have everything to gain by lending to a new customer.

3. But aren’t you cash poor because everything goes into the HELOC?

No, in fact the opposite is true. You get the best of both worlds by keeping your money in your HELOC because it is offsetting your interest expense but it is just as accessible as it would be in your checking account. Plus, unlike your traditional mortgage the creates trapped equity as you pay down your balance, you now have your equity liquid and accessible in the event of a financial hardship, thus providing a built-in emergency fund.

4. Isn’t the variable rate a huge risk if interest rates increase?

No, and I will explain why. When people hear the term variable rate, they are usually thinking of an Adjustable Rate Mortgage or ARM which is a very risky loan. The thing that makes it so risky is due not so much to the rate increase as it is to how the loan is amortized. With a 3-1 ARM, if the rate increases after the first three years, the payment goes up because the increased interest is calculated over the 27 remaining years, lumped on top, and front-loaded. With a HELOC, a rate increase would have a modest impact to an already lower payment and that payment would continue to decrease each month thereafter. In addition, each subsequent rate increase would have a smaller and smaller impact which I refer to as a “speed bump effect”. So the overall effect is drastically different than an ARM.

5. Wouldn’t just paying extra payments or going to a 15 year mortgage do the same thing?

Let’s Compare! Designed to Prosper vs Traditional 15 and 30 Year Mortgages

For those of you who would like to see how this would compare with a traditional fifteen or thirty year mortgage, I have included this example that illustrates the effectiveness of this option.    


Type of Mortgage



Designed To Prosper


30 Year 15 Year 5 Years, 1 Month**

Mtg. Amount

$250,000 $250,000 $250,000

Interest Rate

3.75% 3.25% 3.75%

Min. Payment

$1157 $1757 $781 Decreasing Quickly

Total Interest Paid

$166,804 $66,201 $25,010

Mtg. Bal. at 5 Yr. 1 Mo.

$224,284 $177,225 $0

Saved Payments

$345,943 $209,083 -

Interest Saved

$141,794 $41,191 Using Designed to Prosper

*Note that the interest rate for the 15 year mortgage is 0.5% less than the 30 year mortgage to provide an accurate illustration.
**The above example for the Designed to Prosper illustration assumes a monthly income of $8000 and monthly expenses of $3500 excluding the mortgage.

Note that at the 5 year, 1 month point where the mortgage is completely paid off using the Designed to Prosper strategy, both traditional mortgages still have significant outstanding balances. I hope that this example provides some insight as to the dramatic difference that this can make in people’s finances and lives.

6. What are the criteria that would make someone a good candidate for this strategy?

  • Homeowners with a 90% LTV equity position, however strong positive cash flow and/or significant savings trumps LTV
  • Positive or breakeven monthly cash flow
  • Having multiple types of debt outstanding (car loans, student loans, credit card balances)
  • Owners of rental properties
  • People who want to build income streams for retirement
  • People who want to pass on generational wealth
  • People who want to make the most of their hard earned money

***Please note though that if you do not meet the above ideal criteria does not necessarily exclude you from being able to implement this strategy. It would take analysis by us to determine whether or not you would be eligible at this time. If not, we may be able to offer a plan and timeframe on how to get to the point of being able to implement. We have helped people with significant long-term debt who are just able to keep up month to month with their bills. We have also helped people who were underwater on their current mortgage so I would encourage you to complete the questionnaire and schedule a free consultation. You have nothing to lose but everything to gain!

7. Do all banks offer these type of loans?

No, not all banks offer the right HELOC for this strategy. That is where we can help by making sure that you get the right tool.

8. Is the interest still tax-deductible mortgage interest?

Yes, the mortgage interest is still tax-deductible.