How refinancing to consolidate debt works
In Canada you can refinance your mortgage up to 80% of your home's value. The room left after your current mortgage (and any HELOC) is what you can use to roll high-interest debts, credit cards at around 19.99%, lines of credit, car and student loans, into your mortgage at a much lower rate and one predictable payment. Because the mortgage rate is a fraction of a credit card rate, your monthly payments and interest cost usually drop sharply, freeing up cash flow every month.
The trade-off is amortization: consolidated debt is spread over a longer period, so total interest depends on how fast you repay. The smart play is to keep paying close to your old total each month, so you clear the balance faster. If you'd be breaking your current term to do this, there may be a prepayment penalty. Weigh it against the savings with the early renewal calculator. We confirm your exact numbers and structure the move so it works in your favour.