Debt Consolidation Mortgage Ontario

You refinance your existing mortgage to access your home's equity, using those funds to pay off high-interest debts (credit cards, car loans, etc.). You're left with one single monthly payment at your mortgage's much lower interest rate — typically 4-7% vs 19-29% on credit cards.

Most lenders require you to maintain at least 20% equity after consolidation (maximum 80% LTV). For example, if your Toronto home is worth $800,000 and you owe $500,000, you could access up to $140,000 to pay off debts ($800K × 80% = $640K max mortgage).

Short term: Yes, slightly (new credit inquiry, mortgage refinance). Long term: Usually improves significantly. Paying off maxed-out credit cards lowers your utilization ratio, which is a major credit score factor. Most clients see credit improvement within 6-12 months.

Costs typically include: mortgage penalty (if breaking your current term early — usually 3-months interest or IRD), legal fees ($1,000-$1,500, often covered by new lender), and appraisal fee ($300-$500, often covered). We calculate your break-even point so you know if it makes financial sense.

Refinancing (blending into your first mortgage) usually gives the lowest rate. A second mortgage or HELOC is better if you don't want to break your first mortgage term and pay penalties. We compare both options and show you the numbers so you can decide.