Consolidate Debt Into Your Mortgage in Ontario
Yes. If you own a home with enough equity, you can roll high-interest debts — credit cards, lines of credit, car loans, even tax arrears — into your mortgage through either a refinance (equity takeout) or a second mortgage. One payment, one much lower interest rate, and a real payoff plan.
The Two Ways to Do It
1. Refinance (equity takeout)
Replace your current mortgage with a larger one and use the extra funds to pay off your debts. Best when: your current mortgage rate isn’t great anyway, or you’re close to renewal and won’t face a painful penalty.
2. Second mortgage
Take a separate loan against your equity and use it to clear the debts. Your first mortgage stays exactly as is. Best when: you locked in a great rate on your first mortgage that would cost a fortune to break.
Not sure which fits? Compare them side by side.
Why It Works
Credit cards routinely charge around 20% interest. Mortgage borrowing costs a fraction of that. Rolling high-interest balances into your mortgage doesn’t just slash the interest — it turns five minimum payments into one scheduled payment with an actual end date.
The real question isn’t whether the rate is lower (it almost always is). It’s whether the whole plan leaves you better off after fees, penalties, and the new payment are counted. That’s exactly what we calculate with you — free — before anything is signed.
What You Need to Qualify
- Enough equity — the 80% rule: your total mortgage borrowing generally can’t exceed 80% of your home’s appraised value. Run your numbers.
- Income to carry the new payment — lenders need to see affordability.
- A plan for the cards — lenders want the paid-off balances to stay paid off. Cutting up the cards or lowering their limits is often part of the deal.
Dealing with bad credit? It’s not automatically a no. Alternative and private lenders weigh your equity heavily. See bad-credit options, or read how an equity takeout works with bad credit.
The Honest Downsides
- You’re converting short-term debt into long-term debt. Without discipline, the payment can stretch for years and cost more overall.
- Breaking a mortgage mid-term can trigger penalties. We check whether waiting for renewal — or using a second mortgage instead — avoids them.
- Your home secures the borrowing. This only makes sense with a realistic budget behind it, and we’ll tell you straight if the numbers don’t work.
How It Works With Us
- Tell us the debts — balances, rates, monthly payments
- We run the comparison — refinance vs. second mortgage, true costs side by side
- You pick the structure — or we tell you honestly if consolidation doesn’t pay off for you
- Debts get paid out — usually directly by the lawyer on closing day
Frequently Asked Questions
Will consolidating hurt my credit score?
Paying off revolving balances usually helps your score over time. The new mortgage inquiry causes a small, temporary dip.
Can I include tax arrears or debts in collections?
Often, yes — CRA debt and collections can sometimes be folded in, depending on the lender.
What if I don’t have 20% equity?
A refinance may not work, but other structures sometimes do. It’s worth a conversation.
How fast can this happen?
Second mortgages can fund in 1–3 weeks; refinances typically take 2–4 weeks from a complete application.
Do I have to close my credit cards?
Not always, but lenders usually want limits reduced or cards closed so the debt doesn’t just rebuild.
Direct: 647-627-8648 · Toll-Free: 1-800-820-5188 · Principal Broker Lic. #M13001328 · Allen Brothers Circle Inc. — Brokerage Licence #13392 · 2540 William Jackson Dr, Pickering, ON L1X 0E4
Drowning in high-interest payments? Apply now or call 647-627-8648 (direct) / 1-800-820-5188 (toll-free). Free consultation, zero pressure.
Related: Equity Takeout & Second Mortgages · Second Mortgages in Ontario · Second Mortgage Rates in Ontario · Equity Takeout vs HELOC · How Much Equity Can I Take Out?