How to increase your cash flow by refinancing your mortgage

How to increase your cash flow by refinancing your mortgage

Are you juggling multiple monthly payments and wondering how to increase your cash flow? You are not alone. Many people struggle with accumulating debt, unexpected expenses, costly renovations, urgent repairs and high-interest credit cards.

Refinancing your mortgage can be a solution to increase your liquidity and reduce your debt.

Credit card minimum payments: a source of debt

  • Credit card minimum payments are on the rise. They will increase from 3.5% to 4% in August 2023 up to 5% in August 2025. All new cards issued after August 1, 2019, the minimum payment is 5%. Click on this link to read about the new measures on the Consumer Protection Office.
  • The average credit card interest rate is 19.9%, which is a significant financial burden for many.

Mortgage refinancing: a winning solution

By refinancing your mortgage, you can get a lower interest rate than your credit cards. The average mortgage rate is currently 5.24%, saving you 14.75% on your interest.

You can also increase your liquidity by consolidating your debts into your mortgage. This allows you to only have one monthly payment to manage.

How much can you save?

The amount you can save by refinancing your mortgage depends on several factors, such as the amount of debt you have, the interest rate on your current loan, and the interest rate you can get on a new loan.

Here is an example:

Let’s say you have $20,000 in credit card debt with an interest rate of 19.9%. You make minimum payments of 3.5% each month. It will take you 69 months to repay your debt and you will pay $6,794 in interest.

If you refinance your mortgage and consolidate your credit card debt, you can get an interest rate of 5.24%. Your monthly payment will be $376 and you will pay off your debt in 60 months. You’ll only pay $1,944 in interest, saving you $4,850.

Debt consolidation and credit rating

Refinancing your debts does not negatively affect your credit score. In fact, it can even improve it by reducing your credit utilization.

Contact me to find out if refinancing is a good option for you.