PC, it doesn’t. If you have a 10% savings rate, redirect that to paying off the home without an HELOC, you actually pay it off faster.
I know they are applying your savings to the loan for one simple reason, if you change the rate of savings on their simulator, the payment shortens. Shortens dramatically. If you change the expenses so there is little savings, it errors and takes 29.7 years.
i.e. If you have a $400,000 loan on the simulator with $120K income and 10% savings rate, you can pay the loan off in 17.2years. Of course, if you just apply that $1000/month “savings” to the loan, you’d actually pay it off in 14 years 10 months. If you double your savings rate to 20%, then you could pay off in 10.9 years. If you actually applied $2000 surplus to loan, you’d pay off in 10.1 years.
If you go in adjust the expenses so there’s less excess cash, say only $300/month, the payoff results in 29.5 years (6 months early), however if you’d just pay $100/month more on a $400K loan, you would actually pay it off in 27 years.