Unlocking Cash Flow

Scenario:

Client has an impending mortgage renewal with an increase in interest rate from 2.58% to 7.09% plus considerable high interest debt.

Without Refinance:

·  Mortgage of $338,000

·  Existing lender offered, 2 year fixed, 30 yr amortization 7.09%

·  Monthly mortgage payment $2400

·  Additional Minimum Monthly High Interest Debt Payments of $2400.00

·  Total Monthly Payments after renewal – $4800

 After Refinance:

·  Payout all high interest debt increasing mortgage to $434,000

·  Secure 1 year fixed at 7.04%, 35 year amortization

·  Monthly mortgage payment of $2750

·  No additional debt payments

 Highlights:

·  Savings per month $2050

·  Client set up to re-renew in 1 year at a lower interest rate further increasing monthly savings

Bottom Line:

Working with this client dramatically highlighted how refinancing a mortgage to consolidate debt can be a strategic solution to significantly enhance cash flow. By refinancing, the client was able to pay off high-interest debts, thereby reducing their monthly financial obligations and freeing up substantial cash flow. This approach not only improved the client’s financial stability but also opened new opportunities for investment and property upgrades.