Mortgage Debt Consolidation
Rolling high-interest credit card debt into a mortgage rate — when it works and when it backfires.
The math behind consolidation
Credit cards in Canada typically charge 19.99%–29.99% interest. A first-mortgage refinance currently runs 4–6%. Rolling $50,000 of credit card debt into a mortgage cuts the interest cost by roughly $7,000–$10,000 per year. Spread monthly, that's $500–$800 freed up in cash flow.
When consolidation actually helps
Consolidation makes sense when: you have enough equity (you'll need at least 20% remaining after the refinance), the rate gap is meaningful, and you've addressed the spending pattern that created the debt. Without that last step, many homeowners refinance, run up the cards again, and end up worse off in 18 months.
Bruised-credit consolidation through alternative lenders
If your credit has taken hits from missed payments, alternative B-lenders will still consolidate — typically at 6–8% with a 1% lender fee and a 1- or 2-year term. The plan is to rebuild credit over that term and refinance back to a prime lender at standard rates.
What you'll need to qualify
Most consolidation refinances need: an appraisal (to confirm equity), recent mortgage statements, statements for every debt being rolled in, income documentation, and a recent property tax bill. For self-employed or commission-income borrowers, expect to provide two years of T1 generals or 6–12 months of bank statements.
How fast a consolidation can close
Standard prime-lender consolidations close in 2–3 weeks. Alternative-lender files often close in 7–14 days. Private consolidations (used when banks have declined) can close in 5–10 business days when the equity story is clear.
Have questions about your situation?
Every mortgage file has its own story. A 15-minute call with Jay is enough to know your real options.