No!
Seriously, no! You
could do what she describes, and it would be better than just making minimum payments, but it's an expensive way to go about it.
She's told a story about paying off a repayment mortgage (as opposed to an interest only mortgage) where, in the early years, the majority of the repayment goes towards interest. So far so good. She then doe some "refinancing" after four years, but doesn't explain whether this was to buy a bigger house, renovate, take a holiday, reduce payments or what. Her example assumes payments stay the same but that the repayments are now servicing the original mortgage, not the mortgage 4-years-on. So, problem #1 is her assumption that "people" will just keep maxing out their mortgage and spending whatever equity they had built up. (The same people who can then magically control their finances and save 2k a month!)
She then talks about a "line of credit" i.e. a credit card, on which she has 12k of debt and in her original plan, was making minimum payments. In her new plan, she pays off the credit card with her full salary (5k) of which 2k is excess over spending. This 2k was magicked up, as it existed in the first scenario, but she didn't recognise it. She pays down a 12k credit card debt in 6 months (good) but then suggests borrowing 12k ON THE CREDIT CARD to pay off 12k on the mortgage. Now she's got a cc type monthly interest payment again! At this point she forgets to "refinance" after a further four years, so again not comparing apples with apples in the two scenarios.
She doesn't differentiate between the ANNUAL 6% mortgage rate, and the MONTHLY 5.5% line-of-credit rate. I'm assuming it's a monthly rate, as why would a bank loan you short term at a better rate than they let you have a mortgage?
She uses her monthly salary to offset her cc balance, paying it down as much as possible, then letting it build back up as she spends during the month. That bit makes sense, provided you make sure all your outgoings on the cc are credit payments and not "cash advances", otherwise the interest will be punative. Once the cc is paid off, it's fine to keep spending on it, so long as you pay it off in full every month! i.e. a monthly interest-free loan and cash flow/ convenience.
There is a simple way to look at this:
1. Save up an emergency fund
2. Pay off your debts - highest interest rates first
3. Pay off mortgage or save / invest for future self.
Step 1. Save enough cash for an emergency - look back over the last say, 10 years and ask "how much cash did I need in an emergency?" Don't include stuff that you are currently insured for. Don't include discretionary emergencies (i.e. buying a nice car as opposed to a utilitarian car that will equally do the job, should the old one pack up).
Step 2. Rank your debts in decreasing monthly interest rates (not total payment, but % interest charged). Throw all excess cash at the first one until it's wiped out. Then start on the next one. Kepp going until all non-mortgage debt (and student debt if applicable) is gone.
Step 3. Understand your mortgage Ts&Cs. Some allow overpayment, some only up to a certain %, or certain % per year. Others may have wierd and wonderful rules about how you need to go about paying off capital, as opposed to interest. Read the details or ask the bank to confirm in writing what the repayment rules are. Once you know the rules, you can make a payment off of the capital element of the mortgage.
If the mortgage was interest-only, you will now be overpaying the interest. Find out if these overpayments will be credited against the capital immediately, or accrued but not applied (i.e. you have a "credit" at the mortgage company, but it doesn't get any interest). Decide whether it is better to reduce payments back to interest only (the bank will tell you the correct figure) and to save the difference (e.g. mortgage drops from £500pcm to £490pcm, so you could save £10pcm) in an interest-bearing account, ready to pay down the mortgage again when you have the next lump sum ready, or to leave the overpayments with the bank and let them apply them to the mortgage as per their rules.
For much better advice, take a look at
Martin Lewis's MSE page:
https://www.moneysavingexpert.com/mortg ... vs-savingsIf you are still unsure, try and map out your specific situation in a spreadsheet, month by month. It may take a little while, but better to "prove" what you are doing is right than to make an expensive mistake!
VRD