Debt Consolidation Through Refinancing
Credit cards at 19.99%. Car loans at 7%. Lines of credit at 8%. Meanwhile, your mortgage is at 5%. Does rolling all that debt into your mortgage make sense? Often, yes — but let’s look at the full picture.
The Rate Advantage
Mortgage rates are among the lowest available because they’re secured by your home. When you consolidate high-interest debt into your mortgage, you replace 15-20% interest with 4-6% interest. The savings can be dramatic.
The Monthly Payment Impact
Consolidation typically reduces your total monthly payments significantly. Instead of paying $500 minimum on credit cards, $400 on a car loan, and $200 on a line of credit, you might add $300 to your mortgage payment. Cash flow improves immediately.
📊 Example
Before consolidation: $1,100/month in separate payments
After consolidation: $300 added to mortgage payment
Monthly savings: $800 in freed-up cash flow
The Considerations
- Prepayment penalty: Breaking your mortgage early has costs — we’ll calculate if savings outweigh the penalty
- Extended amortization: You may be paying longer overall — accelerated payments can offset this
- Behavioural risk: If you run up new debt after consolidating, you’re worse off
💡 Strategic Timing
Consolidate at renewal when there’s no penalty. If your renewal is within 12 months, it may make sense to wait. If rates are rising or your debt load is crushing you, acting now might be worth the penalty.
Elevation Mortgage
INDEPENDENT MORTGAGE BROKERS · LICENSED AB & BC
Julie & Andy Jeffery — independent mortgage brokers serving Calgary, Nelson BC,
and clients across Alberta and British Columbia.
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