How to increase your liquidity by refinancing your mortgage

How to increase your liquidity by refinancing your mortgage

Refinancement hypothécaire
Rui Alberto Maia
Courtier Hypothécaire

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

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

Minimum credit card payments: a source of debt.

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

Mortgage refinancing: a winning solution.

  • By refinancing your mortgage loan, you can obtain a lower interest rate than that of your credit cards. The average mortgage rate is currently 5.24%, allowing you to save 14.75% on your interest.
  • You can also increase your liquidity by consolidating your debts into your mortgage loan. This allows you to have only one monthly payment to manage.

How much can you save?

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

Here’s an example:

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

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

Debt consolidation and credit score

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

Explore Your Mortgage Options

Ready to move to the next step? Contact me for a personalized consultation now.

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Rui Alberto Maia, Courtier Hypothécaire - Logo

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