Why the payment drops so sharply
Credit cards and unsecured lines carry rates many times higher than a mortgage, and their minimum payments are structured to keep balances alive for years. Moving those balances into a mortgage at a far lower rate, amortized over a longer period, cuts the monthly outflow substantially even after closing costs.
What can be paid out at closing
Your lawyer pays these directly from the refinance proceeds, so nothing depends on you moving money afterward.
- Credit cards, store cards, and unsecured lines of credit
- Personal loans and car loans
- CRA and property tax arrears, including registered liens
- Collections and judgments on title
- An existing second or private mortgage
The qualifying catch
Banks look at total debt service ratios. Ironically, the debt you want to consolidate is what can push the ratios offside. Two fixes are common: extend the amortization to lower the qualifying payment, or place the file with an alternative lender that uses broader income and ratio rules.
Do not skip the discipline step
Every failed consolidation looks the same: the cards are paid to zero, the limits stay open, and eighteen months later the homeowner carries both the cards and the larger mortgage. Close or reduce the limits at closing and redirect the monthly savings to a fixed target - a lump-sum prepayment, an emergency fund, or an accelerated payment schedule.
When a second mortgage is the smarter tool
If your first mortgage carries a low rate and the penalty to break it is large, consolidating through a second mortgage and then combining everything at renewal usually costs less than refinancing today.
Frequently asked questions
- Will consolidating improve my credit score?
- Typically yes over a few months, because revolving utilization drops to zero and payment history stays clean.
- Can I consolidate CRA debt into a refinance?
- Yes. Tax arrears and CRA liens are routinely paid out from refinance proceeds at closing.
Talk to a Toronto private mortgage specialist
We arrange equity-based financing across Toronto and the GTA, whether you need a first position from a private lender or a second mortgage behind the bank you already have.