Is your mortgage renewal coming up in the next six months? Then it’s the perfect time to talk to your mortgage broker about consolidating some of that debt into your mortgage with a refinance.
Over the past five years—or however long you've had your mortgage—life has been happening. You may have built up some debts that you really don't want and you feel like you're spinning on the hamster wheel on interest payments.
Instead of doing a straight mortgage renewal with your lender, let's have a deeper look at what's going on. I've helped a few clients this past year where they were ten years into their mortgage, and every term, they just keep renewing.
They had accumulated debt because of life! Job loss, COVID, just a combination of factors.
What we did is we had a good hard look at where they're at and found that they had quite a bit of equity in their home. We could refinance off a large portion of their line of credit and credit cards and wrap these debts into the mortgage.
We then looked at what they needed for cash flow, set their payments for increased cash flow, and use what they were making in interest-only payments to either make a lump sum payment on their mortgage or save for a rainy day.
Mortgage Refinance At Renewal Example
If your home value is $400,000, the maximum mortgage on a refinance is $320,000.
Your current mortgage payment is $1,647/month and your current balance is $295,000.
This leaves approximately $25,000 available equity that you can use.
If you have $25,000 credit card debt, your interest payment is approx $400/month.
You could refinance your home, pull out that $25,000 and pay off that high-interest debt for a new mortgage payment of approx $1,753/month.
That clears up $300/month in cash flow.
You can use this to pay down any other debt, save for a rainy day fund or do lump sum payments on your mortgage!
Does It Make Sense To Do a Mortgage Refinance?
Let's have a look to see what we can do. It might not always make sense to do a mortgage refinance.
Perhaps you’re really early into your new term or it would cost you more to refinance than not. That’s why if you’re coming up for your mortgage renewal in the next six months, we can avoid high-cost penalties since you’re at the end of your term.
Sometimes refinancing may mean increasing amortization, but again, the amortization is just a number. We’re going to look at your overall goals. If we have to increase amortization up to back up to 25 years, it's okay. We can look at if you still have a goal to pay off your house in 15 years, even though we're upping that amortization.
Let’s work together on your mortgage renewal so you’re taking advantage of the options available to you.
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