Ontario Debt Consolidation
Carrying high-interest debt on top of a mortgage? Your equity might change the math.
If you own your home and carry credit card balances, car loans, or other consumer debt, rolling that debt into your mortgage can lower your monthly payments significantly. Jesse runs the numbers and tells you whether it actually makes sense in your situation.
How It Works
Using home equity to pay off high-interest debt
Debt consolidation through your mortgage takes multiple high-interest balances and rolls them into a single, lower-rate payment secured against your home. Credit cards charge 19% to 24%. Car loans run 6% to 12%. Personal lines of credit sit around 7% to 10%. Mortgage rates are considerably lower than all of these.
The mechanics are straightforward. You use your available home equity to pay off existing consumer debt. That debt becomes part of your mortgage, and you make one payment at mortgage rates instead of multiple payments at higher rates.
The key number is your available equity: 80% of your home’s appraised value minus your current mortgage balance. That is how much you can access.
The Rate Advantage
Why your mortgage rate matters
The difference between consumer debt rates and mortgage rates is where the savings come from. Here is a typical comparison.
Typical interest rates by debt type
Rates shown are typical ranges as of early 2026. Your actual rate depends on your credit profile, equity, and the consolidation method chosen.
Your Options
Three ways to consolidate debt with your home
Refinance
Break your existing mortgage and start a new one at a higher balance that includes your debt. One payment, one rate, one amortization schedule.
Rate: Your new mortgage rate
Best for: Large debt amounts, wanting a single fixed payment
Trade-off: Prepayment penalty if breaking mid-term. Legal and appraisal costs apply.
HELOC
A revolving line of credit secured against your home. You draw what you need, pay it down, and the credit is available again. Rate is variable, tied to prime.
Rate: Mortgage rate + ~0.50%
Best for: Moderate amounts, wanting flexibility
Trade-off: Variable rate. Requires discipline since the credit reopens as you repay.
Second Mortgage
A separate loan registered behind your first mortgage. Your existing mortgage stays untouched. Useful when breaking the first mortgage is too costly or not an option.
Rate: Mortgage rate + ~4.00%
Best for: Avoiding a prepayment penalty, credit challenges
Trade-off: Higher rate. Shorter terms (typically 1 to 3 years). Lender fees may apply.
Side-by-Side
Comparing your consolidation options
| Factor | Refinance | HELOC | Second Mortgage |
|---|---|---|---|
| Interest rate | Lowest (mortgage rate) | Moderate (prime + margin) | Highest (mortgage + ~4%) |
| Payment structure | Fixed monthly payment | Interest-only minimum | Fixed monthly payment |
| Access to 80% LTV | Yes | Yes | Yes (combined with first) |
| Penalty to set up | Yes, if mid-term | Often avoidable | Typically none |
| Legal and appraisal costs | $1,500 to $3,000 | $500 to $1,500 | $1,000 to $2,500 |
| Revolving credit | No | Yes (re-borrowable) | No |
| Ideal debt amount | $20,000+ | $10,000 to $50,000 | $10,000 to $75,000 |
| Term flexibility | 1 to 5 year terms | Open / revolving | 1 to 3 year terms |
Run the Numbers
How much could you save by consolidating?
Enter your current debts and mortgage details below. The calculator compares your total monthly obligations today against a single consolidated payment.
Your current debts
Your mortgage details
Consolidation method
New payment calculated at your mortgage rate on the combined balance.
Honest Assessment
When consolidation works and when it does not
When it makes sense
- ✓You carry $15,000 or more in high-interest debt and the monthly payments are straining your cash flow
- ✓You have sufficient home equity to cover the consolidation
- ✓The interest rate drop from consumer debt to mortgage rates creates meaningful monthly savings
- ✓Your debt-to-income ratio is affecting qualification for other financial goals
- ✓You have a plan to avoid re-accumulating consumer debt after consolidation
When it may not be the right move
- ✕The debt amount is small relative to the cost of refinancing
- ✕Your mortgage renewal is within 6 months and you can wait
- ✕The prepayment penalty to break your current mortgage outweighs the savings
- ✕The spending patterns that created the debt have not changed
- ✕You have limited equity and the consolidation only covers a fraction of what you owe
The honest conversation
Consolidation solves the interest rate problem. It does not solve a spending problem. If the same habits that created the debt continue after consolidation, you can end up with a larger mortgage and new consumer debt on top of it. Jesse discusses this openly with every client considering this option.
Want to see what consolidation looks like with your numbers?
The Process
What happens when you call
Tell Jesse your situation
What debt you are carrying, your mortgage details, and your home value. This is a 10-minute conversation. No documents needed at this stage.
Jesse runs the numbers
He calculates your available equity, compares all three consolidation options, factors in any penalties, and maps out your monthly savings clearly.
You decide with full visibility
Jesse presents the options side by side. If consolidation makes sense, he handles the application. If it does not, he tells you that directly.
Frequently asked questions
Yes. The debt you consolidate gets added to your mortgage. Your mortgage balance will be higher, and your amortization resets or extends. The trade-off is a much lower interest rate on that balance compared to credit cards or personal loans.
You can, but you will pay a prepayment penalty to break your existing mortgage. Whether it is worth it depends on how much high-interest debt you are carrying and how large the penalty is. Jesse runs both scenarios so you can compare.
Credit cards, personal loans, car loans, lines of credit, student loans, tax debt, and other consumer obligations. Essentially any debt that shows on your credit bureau can be rolled into the consolidation.
Usually the opposite. Paying off revolving balances like credit cards typically improves your credit score because your utilization ratio drops. The new mortgage balance is an installment loan, which credit bureaus treat differently than revolving credit.
In Ontario, lenders allow refinancing up to 80% of your appraised home value. The difference between 80% of your home value and your current mortgage balance is your available equity. That number needs to cover the debt you want to consolidate.
This is the most important question to ask honestly. Consolidation solves the math problem, but it does not change spending patterns. If the underlying behaviour does not change, you can end up with a larger mortgage and new consumer debt on top of it.
The only way to know is to run the numbers on your actual situation.
Jesse looks at your debts, your equity, and your mortgage details. He compares all three consolidation paths and tells you which one saves you the most. One call.
