Blended loan payoff trick that cut my interest by $1,400

I had this messy HELOC plus a business line of credit with different rates, and I kept paying minimums because cash flow was tight. Then my loan officer in Phoenix suggested I re-amortize the HELOC into a fixed term and dump every extra dollar into the business line first, not the one with the higher rate. At first I thought it was backwards, but after 8 months the interest savings hit $1,400 and I finally cleared the smaller balance. The trick is doing a monthly sweep where you pay 10% over on the line and let the HELOC ride its new schedule. Has anyone else tried blending payoff order like that or is this just a regional thing?

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evaallen17d ago

That 10% over on the line each month, is that a set amount or did you adjust it when cash flow got weird? I ask because my HELOC payment is due on the 1st and my business revenue hits on the 15th, so timing always messes with my extra payments. Also, did your loan officer put any prepayment penalty fine print in that re-amortized deal, or was it really as clean as it sounds? I’d hate to lock into a new schedule and then get hit with a fee for paying down the wrong balance faster.