Back to Blog
15 Jan

Consolidate Debt Into a Mortgage

Mortgage Tips

Posted by: Kim Seifert

Is It a Good Idea to Consolidate Debt Into a Mortgage?

With Blue Monday (January 16, 2023) tomorrow we need to address if it is a Good Idea to Consolidate Debt Into a Mortgage. Building up a case to refinance your mortgage for debt consolidation purposes can depend on a number of key factors. The amount of equity you’ve got in your home can dictate the total amount of debt you’ll be able to pay off.
Blue Monday is the name given to a day in January, typically the third Monday of the month as it is the most depressing day of the year. It is also around the time people start receiving the Christmas Credit Card Bills, returning to their regular work schedule.

Here are a Few Reasons to Consider Refinancing:

  1. HELOC/ Unsecured Lines of Credit interest rates have increased significantly (variable-rate)
  2. Having trouble making the minimum Credit Card Payments, Personal Loans or paying your Vehicle Loan?
  3. Need to Free up funds to purchase life necessities like food, utilities, schooling, etc. (Monthly Budget)
  4. Currently in a variable-rate mortgage, want to stabilize your payments
  5. Lower Interest Rates then on LOC’s (average 7.5%-9%) and Credit Cards (average 17%-21%)
  6. Ease Money Stress on Close Relationships. Money issues often are one of the top disputes in a household. Especially, if one person is a spender.
  7. Considering missing mortgage payments or defaulting on your mortgage.

Below are Good Guidelines to Follow:

When it comes to your home expenses and overall monthly budget, the goal is the costs to maintain your home do not exceed 35% of your total monthly income.
Monthly Budget: To help you keep track of your finances, consider breaking up your monthly budget into the following categories.
  1. Housing – 35% of your monthly income
  2. Transit – 15% of your monthly income
  3. Debt – 15% of your monthly income
  4. Savings – 10% of your monthly income
  5. Life – 25% of your monthly income

Because everyone’s debt is a little different, you’ll need to put together an accurate monthly budget to know how much cash is coming in and going out.
CMHC Debt Service Calculator — Compare your monthly debt payments and housing expenses to your gross household income. Here 

Your Next Steps for Debt Consolidation: It’s key to remember that even though your consumer debt may feel overwhelming, there are options available to help reduce that monthly burden.

Consolidate Debt Into a Mortgage – Other Steps You Should Consider:

  1. Research all your financial options thoroughly before taking any action
  2. Review your monthly cash flow and trim away any unnecessary spending first
  3. Talk to a Mortgage Broker about current refinancing rates, product options, potential early payout penalties, etc.
  4. Build a realistic plan that gets you out of debt in the least expensive way

Let’s Talk Mortgages… Refinance Calculators