Debt Consolidation

Consolidate debt into your mortgage

Use equity in your home to pay off high-interest credit cards and loans. One lower monthly payment, less interest overall.

See if I qualify →

How does consolidating debt into a mortgage work?

A debt consolidation mortgage is a refinance that combines your existing mortgage balance with other debts, like credit cards or lines of credit, into a single new mortgage at your mortgage rate. Because the new loan is secured against your home, the rate is typically far lower than unsecured credit, which can significantly reduce your monthly interest cost.

It only makes sense if you have enough home equity and the math genuinely favours you once penalties and closing costs are included. Model your specific numbers with our debt consolidation calculator.

You can typically consolidate up to 80% loan-to-value of your home's appraised value.
Unsecured debt (credit cards) becomes secured debt (mortgage) once consolidated.
Consolidating resets your amortization unless you structure it as a blend or short top-up.

80%

Max LTV for consolidation

19.99%

Typical credit card rate

4–6%

Typical mortgage rate

Simple monthly payment

Unsecured, high-interest debt

Money owed on credit cards (typically 19–29%) and personal lines of credit (typically 8–12%). These carry high interest because the lender has no collateral behind the loan.

Typical: 19.99% on credit cards

Secured mortgage debt

Debt secured against your property — your mortgage or a HELOC. These carry much lower rates because the lender can rely on the home as collateral.

Typical: 4–6% on mortgages

Worked example: credit cards vs. mortgage rate

Say you owe $40,000 across credit cards averaging 19.99% interest, with minimum payments around $1,200/month, most of which goes to interest.

Before: $40,000 × 19.99% ≈ $7,996/year in interest — roughly $666/month just in interest cost.

After consolidating into a mortgage at 5%: $40,000 × 5% ≈ $2,000/year, or about $167/month in interest.

That's roughly $500/month in cash-flow relief and about $6,000/year saved in interest — before accounting for the refinance's penalty and closing costs, which you should subtract from the first year's savings.

Costs and penalties to factor in

Because consolidation happens through a mortgage refinance, the same costs apply: a prepayment penalty (three months' interest, or the interest rate differential on fixed rates), an appraisal ($300–$500), legal fees ($800–$1,500), and a discharge fee. Always compare the total one-time cost against your ongoing monthly savings before deciding.

Risks to understand

Unsecured debt becomes secured

If you can't make your mortgage payments after consolidating, you risk your home — not just your credit score — because the debt is now secured against your property.

Amortization resets

Rolling debt into a new 25–30 year mortgage can lower your monthly payment but increase total interest paid over the life of the loan if you don't accelerate payments.

Re-accumulating debt

Consolidation only works if you stop using the paid-off credit cards. Running balances back up leaves you with both the old spending habit and a larger mortgage.

Stress test and qualification

You must requalify for the entire new mortgage amount, including the consolidated debt, at the mortgage stress test rate — even if you already hold the existing mortgage.

Why Canadians choose debt consolidation

Dramatically lower interest

Replace 19.99% credit card rates with 4–6% mortgage rates, cutting the interest cost on consolidated balances by well over half.

Lower credit utilization

Paying off revolving balances reduces your credit utilization ratio, which can help your credit score over time.

One simple payment

Instead of juggling several minimum payments across different due dates, make one predictable monthly mortgage payment.

More predictable cash flow

Lower monthly interest frees up cash flow, which can go toward extra mortgage payments or savings if managed carefully.

Who typically qualifies for debt consolidation?

✓ You are a homeowner with enough equity to stay at or under 80% LTV after consolidating
✓ You have meaningful high-interest debt balances relative to your income
✓ You can pass the mortgage stress test on the new, larger mortgage amount
✓ You want to simplify multiple payments into one predictable monthly payment
✓ You're committed to not accumulating new high-interest debt after consolidating

Not sure if you have enough equity? Model it with our debt consolidation calculator, or explore a HELOC as an alternative that doesn't require breaking your existing mortgage. If you're self-employed, we have specialized programs that can help you qualify.

Frequently asked questions

Common questions about rolling debt into a Canadian mortgage.

What is a debt consolidation mortgage?

A debt consolidation mortgage is a refinance where you roll high-interest debts, such as credit cards or personal lines of credit, into your mortgage balance. Instead of several payments at rates of 15–30%, you make one mortgage payment at your mortgage rate, typically 4–6%. It works because your home secures the new, larger mortgage, so the lender can offer a much lower rate than unsecured debt.

Which debt consolidation mortgage lenders offer this in Canada?

Most major banks, credit unions, and monoline (mortgage-only) lenders offer debt consolidation through a standard mortgage refinance, provided you have enough home equity and can pass the stress test. Some B-lenders and private lenders also offer consolidation refinances for borrowers who don't qualify with a traditional bank, usually at a higher rate. A mortgage broker can compare options across 65+ lenders to find the best fit for your credit profile.

Can you consolidate debt into your mortgage in Canada?

Yes, as long as you have enough home equity. You can typically refinance up to 80% of your home's appraised value, and the new mortgage amount (existing balance plus the debt you're consolidating) must stay under that limit. You'll also need to requalify for the full mortgage amount using the mortgage stress test.

Does debt consolidation hurt my credit score?

In the short term, applying for a new mortgage triggers a hard credit check, which can cause a small, temporary dip. In the medium term, consolidation usually helps your score because it lowers your credit utilization ratio once credit cards are paid off. The biggest risk to your score is running the paid-off cards back up again after consolidating.

Ready to get started?

Get your free, no-obligation mortgage quote in minutes.

Get a free quote →