TIP 6: Use BLOC to Make Lump-Sum Payments

The BLOC becomes your funding source

for making lump-sum payments to reduce your mortgage loan balance:

$100,000 Mortgage 30 Year Term - 6% APR	Monthly Lump Sum Payments
	$0	7 - $5,000
Total Payments	$215,838.19	$107,319.54
Total Interest Paid	$115,838.19	$41,785.34
Total Principal Paid	$100,000.00	$100,000.00
Total Interest Saved		$74,052.85
Mortgage Payoff Time	30 Years	14 Years

The objective for making large, up-front payments is to reduce your mortgage loan balance quickly so that more of your regular monthly mortgage payment will be used to pay down the principal.

 

Important Facts to Be Understood

1. You Must Have Discretionary Income for the program to work:
   
   if you are living from check-to-check, you will not benefit from this program. It is your excess monthly income that allows the MP program to reduce your mortgage over time.
   
   Note: you can build discretionary income by using your BLOC to consolidate credit card and other related debts: this topic will be discussed in next slides.
2. The more discretionary income, the faster the payoff:
   the more discretionary income that you generate (by budgeting and savings), the faster the payoff. We have suggestions on building more discretionary income.
3. You need to manage your BLOC payments and tracking activity
   maintaining a bill payment system on your PC such as Quicken or Money can help manage your account activity. Again, you will use your BLOC for all income deposits and expenses payouts.
• Your income will be deposited into your money account. You will then use online banking to transfer the deposit into your BLOC.
• You will advance funds as needed from your BLOC to cover expense payments.
• You will use the BLOC to advance $5,000 to reduce your mortgage loan balance.
• You will then use your discretionary income over time to reduce the $5,000 advance.
• When the BLOC balance drops below $500, you will advance another $5,000 from your BLOC to reduce your mortgage loan balance.
• Repeat the process until your mortgage is paid off.
  
  view our step-by-step plan to maximize the pay-down plan