In short: a debt consolidation mortgage uses the equity in your home to pay off higher-interest debts, so you're left with one payment, often at a lower rate. Because a mortgage agent works as a broker, your file can be compared across many lenders rather than just one.
1. Free consultation
We start with a confidential conversation by text, phone or email. You'll share an overview of your debts (balances, rates and monthly payments), your home's approximate value, your current mortgage, and your income. The goal is to understand whether consolidation could actually help, and to say so plainly if it wouldn't.
2. Equity and affordability review
We estimate your available equity. For a conventional refinance or HELOC in Canada, total secured borrowing is generally limited to 80% of the home's appraised value. We also look at your current mortgage terms, including any prepayment penalty for breaking it early, and whether the new payment would fit comfortably in your budget.
3. Compare paths and lenders
Depending on your situation, the best fit may be a full refinance, a HELOC, or a second mortgage. Your options are compared across a network of 50+ banks, credit unions and private lenders. You'll see the trade-offs: rate, term, payment, fees, penalties and total cost.
4. Application and documents
If you decide to proceed, typical documents include government ID, proof of income (pay stubs, employment letter, T4s or Notices of Assessment for self-employed), your current mortgage statement, property tax bill, and statements for the debts being paid off.
5. Lender underwriting and appraisal
The lender reviews your credit, income, debts and property, and usually orders an appraisal. Approval, rate and terms are decided by the lender. Nothing is guaranteed until you have a written commitment and its conditions are satisfied.
6. Closing and paying off debts
A lawyer handles the closing. In many consolidations, the lender requires that specific debts are paid directly from the proceeds. Afterward, you make one regular payment on the new mortgage or loan.
7. Staying on track
The real benefit of consolidation comes from not rebuilding the old balances. Many people choose to close or lower limits on paid-off cards and set up a simple budget. If you'd like extra support, a non-profit credit counsellor can help.
Costs to be aware of
- Prepayment penalty if you break your current mortgage early
- Appraisal and legal fees
- Lender and/or broker fees, most common with private lending (always disclosed in writing beforehand)
- Potentially more total interest if debts are spread over a longer amortization