Refinance strategy
Refinancing to Consolidate Debt in Toronto: When It Actually Saves You Money
A clear framework for deciding between a refinance, a HELOC, and a second mortgage.
How the math actually works
Credit cards typically charge 19.99–29.99% interest, lines of credit around prime + 1–4%, and a current Toronto A-lender mortgage rate sits dramatically below that. Rolling a $60,000 mix of unsecured debt into a mortgage can drop the combined monthly payment by hundreds or thousands of dollars.
Three ways to pull equity for debt consolidation
- Refinance — break and rewrite the first mortgage, often the lowest cost long-term
- HELOC — flexible revolving credit secured by your home, interest-only payments available
- Second mortgage — registered behind your existing first, often used when refinancing isn't possible
The behaviour problem
Most clients who refinance debt and then run the credit cards back up end up worse off — same unsecured debt plus a bigger mortgage. The discipline plan matters as much as the rate. A good broker will ask about that plan before recommending the refinance.
Frequently asked questions
+How much equity do I need to refinance?
On an A lender refinance you can typically borrow up to 80% of the appraised value of your home. So if your home is worth $1M and you owe $500k, you could refinance up to $800k.
+Will refinancing hurt my credit score?
There is a small temporary dip from the inquiry and the closing of paid-off credit lines, but credit scores typically recover within a few months — and improve longer term as utilization drops.
Keep going
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Related guides
Renewal
Mortgage Renewal vs Refinance in Toronto: How to Choose in 2026
Most Toronto homeowners just sign the renewal letter from their bank — and overpay for five years. Here's when to renew, when to refinance, and how to compare offers properly.
Private Lending
Private Mortgages in Toronto: When They Make Sense (and When to Walk Away)
Private mortgages are short-term, equity-based bridge solutions. They're powerful in the right situations — and very expensive in the wrong ones.
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