HELOC Conversion Calculator
The "velocity banking" pitch: replace your mortgage with a first-lien HELOC, run your paycheck through it, and watch the balance melt. This calculator runs that exact strategy against simply paying extra on the mortgage you already have — same cash flow, honest verdict, backtested against real prime-rate history.
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What actually makes velocity banking fast
Every velocity banking example has the same hidden engine: a household sending far more than the minimum at its debt every month. Point that surplus at any loan and it dies years early. The strategy's real claim is narrower — that routing your paycheck through a HELOC adds something on top. It does. The question is how much, and at what price.
The calculator splits the conversion into its three separate effects, each measured exactly:
- The rate gap: your entire balance moves to the HELOC's rate. It models a typical first-lien HELOC — a variable rate of WSJ Prime − 0.50%, rounded to a quarter point and bounded by a 3.25% floor and an 18% cap, or a flat fixed rate you enter. Rather than guess where prime goes, the variable rate replays the prime that actually happened: pick the month you'd have opened the line and it backtests the rate you'd really have paid — locked to start months whose whole payoff fits inside real data, then sweeping every covered start month to show the full range.
- Paycheck parking: income deposited against the line lowers its average daily balance until you spend it — the genuine "velocity" effect, typically worth a few thousand dollars over a full payoff, not tens of thousands.
- Fees and their drag: closing costs land on the line at day one and accrue interest like everything else.
When the HELOC rate sits near or below your mortgage rate, the parking trick can genuinely win — and the calculator counts how many of the past start-months it actually would have, instead of resting on one guess. And conversion can buy some flexibility: in a tight month your required minimum is 1% of the balance rather than a full amortizing payment — though on a big line that 1% can still exceed your old payment. The caveats are just as real: variable rates, the lender's right to freeze the line, and a revolving balance one impulse away from regrowing.
Weighing a partial draw instead — keeping your mortgage and adding a HELOC on top, or cashing out with a refinance? That's a different (and rarer, big-moment) decision with its own tool: the HELOC vs. Cash-Out Refi Calculator.
Common questions
- When does converting actually win?
- When the HELOC's rate runs close to — or below — your mortgage rate, strong monthly cash flow plus paycheck parking can tip the math toward the line; the calculator backtests every historical start month to show how often it actually would have. With a big rate gap, though, paying the same extra on your mortgage wins, usually by a lot.
- What are the risks the spreadsheet can't show?
- Discipline is the big one — the line is revolving, so every dollar you've paid down is one click from being spent again. Lenders can also freeze or reduce HELOCs when home prices fall (many did in 2008), and a variable rate floats with prime, so a payment you can afford today can climb later.
- Is anything saved or sent anywhere?
- No. Every number runs in your browser. Nothing you type is uploaded, stored, or shared — and you can export all three month-by-month schedules to CSV with one click.
The cash flow is the engine — Taly builds it
Velocity banking, extra payments, any payoff plan — they all run on the gap between what comes in and what goes out. Taly auto-splits every paycheck so that gap shows up on its own, every month.