Debt Consolidation Calculator

We get asked about this almost every week, and the honest answer is: it depends. Debt consolidation through your mortgage can save you a lot of money, or it can quietly cost you more over time. The calculator above is designed to show you both sides without spin. Here's how we think about it on a real file.

The basic mechanic

You refinance your existing mortgage for a larger amount than what you currently owe. The extra cash gets used to pay off your high-interest debts — credit cards at 19.99%, lines of credit at 9%, car loans, CRA balances, whatever's on the list. When the dust settles, you have one mortgage payment instead of five or six bills, and your interest rate on that combined balance is usually a fraction of what your credit cards were charging.

When it actually saves money

The math works when the weighted-average interest rate across all your debts is meaningfully higher than your new mortgage rate. If you're carrying $40,000 in consumer debt at an average rate of 15% and rolling it into a mortgage at 5.5%, you're cutting your interest cost by nearly two-thirds on that money. The other condition — and this one matters more than the math — is that you don't run the credit cards back up after consolidating. We've watched clients clear $30,000 in debt only to be back at $20,000 in cards twelve months later. That's not a financing problem; that's a behaviour problem.

When it costs you money

Here's the part most ads don't tell you. If you take a credit card balance you would have paid off in 12 months and stretch it over a 25-year mortgage, even at a much lower rate, the total interest you pay can end up higher. The calculator above shows you this honestly — it compares the lifetime interest on your current path against the lifetime interest on the consolidated path, not just the monthly payment difference. If the number comes out negative for you, don't do the refinance. The cash-flow relief might feel good, but you're paying for it on the back end.

LTV limits in Canada

Insured mortgages cap refinances at 80% of your home's value. So if your home is worth $600,000, the maximum new mortgage is $480,000. Some uninsured lenders and alternative lenders will go to 85% or even 90%, but the pricing is meaningfully worse — we're talking rates a full percentage point or more above prime-lender pricing, plus lender fees in some cases. If you're stretching past 80%, we'll be very clear about what it actually costs versus the savings.

Typical Canadian rules to keep in mind

You need to have at least 20% equity in your home to refinance with a standard A-lender. The new mortgage shows on your credit report, but the paid-off debts show as paid in full — a net positive for your score over six to twelve months. If you're breaking your existing mortgage mid-term, there's a penalty: three months' interest on a variable, or the higher of three months' interest and the IRD (interest rate differential) on a fixed. Big-bank IRD penalties can be brutal — sometimes $15,000+ on a $400,000 mortgage. Thinking of breaking your mortgage to consolidate? Run our IRD calculator first to get a real number before you commit. If you're a first-time buyer instead and want the full closing-cost picture before you offer, our home buying cost calculator lays out monthly, CMHC, and cash to close side by side. We always calculate the exact penalty before recommending anything.

What we'll look at on a real file

When you bring us a debt consolidation file, we look at four things. Total carrying cost — not just the monthly, but the total interest over the life of all the debts on both paths. Behaviour risk — is the spending pattern that created the debt under control, or are we about to set you up to repeat the cycle. Prepayment penalty trade-off — does breaking your current mortgage early get eaten by the IRD penalty, or is the savings still worth it after that hit. And alternatives — sometimes a HELOC at prime + 0.5% makes more sense than a full refinance, or an unsecured consolidation loan from a credit union beats both. We're not trying to sell you the refinance. We're trying to find the path that costs you the least over the next ten years.