I'm investigating this as an option for when we have to renew our mortgage. In Canada, your mortgage has to be renewed after every term, term can be 1, 2, 3, 4, 5, 6, 7, or 10 years. Even if you amortize over 25 years, you still have to renew.

In December, we are up to renew. The terms of the current mortgage are can pay up to 15% a year in prepayment plus can increase payments up to 100% of the payment during that term. We are at a variable rate, which is currently a wicked 2.75%(sub prime deal). However, we aren't going to get such a great deal next year. We're looking at minimum of 5.5%, prepayment of 10% and increase payments up to 100% of that term.

One bank offers a Secured line of credit as a mortgage option. We'll have under 92K to finance for the house, so 95k with all fees, est. The Secured line of credit, can be paid however much you want, the minimum being interest only. There are NO penalties for paying it off sooner or as quickly as you want. The rate is 4.5% for first 5-10 years(can't remember conditions on this), there are NO renewals necessary.

My SIL did that, consolidated everything, and after 7 years, has paid off her $250K house!!