One of the most intimidating and frustrating parts of this exercise for many is securing the line of credit. Most people’s experience with credit is limited to mortgages, car loans and credit cards. If this is your situation, that’s fine. You are in the majority. Getting a credit line to cycle doesn’t have to be a scary experience. And, like most things in life, once you do it, the second time is a breeze.

First off, understand that there are two types of credit lines available to most people. You can choose between a personal line of credit and a line of credit based on the equity in your home (home equity line of credit). Both have advantages and disadvantages.

A personal line of credit will usually be approved in three days or less. The problem is personal credit lines are usually not very large. Also, since personal lines of credit are unsecured (meaning that there is no physical collateral backing them), the interest rate tends to be higher.

You can usually get more money from a home equity credit line, often with a lower interest rate, but it may take weeks or months for you get approved. Pick the one that you are more comfortable with.

You will be paying some interest on this loan so make sure that you obtain the lowest rate possible. This is important. Make sure that the interest rate you obtain for your credit line is a reasonable rate. This will be a big factor in your cycling success. So don’t be afraid to shop for the best rate.

Credit lines that will accept direct deposit and provide you with an ATM card are best, as are accounts that don’t charge you to write checks. You want to keep all of your expenses as low as possible!

When setting up your cycling plan you have to at some point decide how much money you are going to cycle and how often your cycles will repeat themselves. To decide how much of your credit line you should use, you have to figure out how much surplus you will have left over at the end of the month. Take that number and multiply by 11. Then add it to your monthly income.

To simplify things we are going to continue to use our example of having a $600 surplus each month. Multiply $600 by 11 and you get $6,600. Add your $3,600 income and we get $10,200. Therefore you should use about $10,000 from your credit line to pay against your mortgage each cycle. Some people prefer to cycle every six months instead of once a year. If that is your preference all you have to do is multiply by five instead of 11. The more often you can cycle, the faster you will have your mortgage paid off.

Here is a worksheet to show how simple it is: