How often do you recast your mortgage?

Question

What tool do you use to recast?

I've build a lot of equity in one of my properties and I am thinking about recasting to lower my monthly payment.

Any advise is appreciated

Chris Seveney · Answer

@Cillian Kelly

I never do because my rate is 3%. I can make 2-3x that investing it.

If you have a higher rate it’s not a bad idea, and most do not even know what recasting their mortgage is but I think it boils down to can you do better investing it

Cillian Kelly · Answer

@Shafi Noss @Chris Seveney

Hello, thank you for the responses. A little bit more context, I have a 6.5% interest mortgage that I have been prepaying overtime with extra cashflow from my rental. I've build enough equity and now looking to recast or lower my monthly payment to get more cashflow out for a new project.

Refinancing right now doesn't make sense, if anything I will prob get similar rate and pay closing costs.

Chris Seveney · Answer

makes sense to pay it down since the rate is 6.5%. Investing that delta may have you break even after taxes versus mortgage. If I was you I would be doing the same. One thing to note is by paying it down, it can hurt liquidity so if that is an issue, keeping it in a bank account would be a better bet, but if liquidity not an issue, then I agree 100%

Shafi Noss · Answer

Recasting generally means making a lump sum payment to principal, which is an effective way to reduce your monthly payments.

If you are talking about refinancing to stretch your payments out over a longer time, that is also an way to increase cashflow.

An added bonus is that you will also boost the portion of your payments going to interest, which increases after-tax cashflow.

How often do you recast your mortgage?

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