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Aleksey Tsoy Mortgage Agent · Licence #M20001520
(647) 761-1646
Debt consolidation · Toronto & the GTA

Consolidate debt using your home equity

Search for debt help in Toronto and you will mostly find insolvency trustees. If you own your home and have equity, there is usually a cheaper option worth pricing first.

  • Roll credit cards, lines of credit, car loans and CRA debt into one payment
  • Access up to 80% of your home's value
  • Options for bruised credit — a missed payment is not the end of it
  • No credit check for an initial conversation
  • If a proposal or bankruptcy genuinely is the better route, I'll say so
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Aleksey Tsoy · Mortgage Agent (Level 1) · Licence #M20001520

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What happens next
  1. A 10-minute call to confirm your goals and numbers.
  2. I check your file against 30+ lenders and send you the realistic options.
  3. If it makes sense, we apply. If it doesn't, I tell you that too.
The core idea

Why the arithmetic usually works

Unsecured debt is expensive because it is unsecured. Credit cards commonly carry rates around 20% or higher, store cards higher still, and unsecured lines of credit sit well above mortgage pricing. A mortgage is secured against real property, so it is priced at a fraction of that.

If you have equity in a Toronto home, consolidating means refinancing your mortgage for a larger amount and using the difference to clear those balances. You replace several high-interest payments with one lower-interest payment. For most households carrying meaningful card balances, the drop in required monthly payment is substantial — often the difference between treading water and making progress.

The honest trade-off, stated plainly
You are converting unsecured, short-term debt into debt secured against your home and stretched over a long amortization. The monthly payment falls. The total interest paid can still be higher if you simply let it run for 25 years — and the debt is now attached to the roof over your head. This is the right move when it is part of a plan, and the wrong move when it is a reset button you press twice.

That is the conversation I have with everyone on this. The arithmetic is usually favourable. Whether it fixes anything depends on what caused the balances in the first place.

Consolidation mortgage or consumer proposal?

If you have been researching debt options you have probably been reading insolvency trustee websites, because they dominate the search results for debt help in Toronto. Those are legitimate, regulated professionals and sometimes a proposal or bankruptcy genuinely is the right answer. But a Licensed Insolvency Trustee sells insolvency solutions, and if you own a home with equity you are frequently not an insolvency case at all.

The short version of the difference:

  • A consolidation mortgage pays your creditors in full. Your credit recovers from the point the balances are cleared. You keep your home and your equity, less what you have borrowed against it.
  • A consumer proposal settles your debts for less than you owe. It is noted on your credit file for years after completion. Critically, your home equity is counted — a trustee will generally expect it to be contributed, so homeowners with substantial equity often find a proposal is not available on attractive terms anyway.

So the sequence that makes sense is: price the consolidation first, because it is the option that preserves the most. If the numbers do not work — if there is not enough equity, or the income cannot carry the consolidated payment — then an insolvency professional is the right next call, and I will tell you that rather than selling you a mortgage that delays the inevitable by a year.

What can be consolidated

Credit cards and store cards

The usual driver, and where the saving is largest. Rates around 20% and up, with minimum payments structured so the balance barely moves.

Unsecured lines of credit

Priced above mortgage rates and, being variable, they have moved against borrowers in recent years.

Car loans and leases

Can be folded in. Worth thinking about carefully — stretching a car loan over your mortgage amortization means paying for a vehicle long after you have replaced it.

CRA tax debt

Interest accrues and CRA has collection powers other creditors do not, including liens against your property. Most A-lenders will not refinance to clear CRA debt; several alternative lenders will. This is a common and solvable file.

Private or second mortgages

If you took an expensive second mortgage to get through a difficult period, folding it back into one first mortgage is often the single largest monthly saving available to you.

Collections and judgments

Often required to be cleared as a condition of the new mortgage in any case. Your lawyer handles the payouts directly on closing.

How it works

  1. An honest inventoryEvery balance, every rate, every minimum payment. Uncomfortable, and the only way to know whether this works. No credit check needed for this part.
  2. I establish your equity positionYour home's likely value against your mortgage balance. Most lenders cap a refinance at 80% of value, so that sets the ceiling on what can be cleared.
  3. Qualification, honestly assessedA refinance is always stress-tested at the minimum qualifying rate. If your credit has taken damage, A-lenders may decline and alternative lenders become the route — at a higher rate, with a plan to return to an A-lender at renewal.
  4. You see the full comparisonCurrent total monthly payments versus the consolidated payment, and the total interest cost both ways over the term. Both numbers, not just the flattering one.
  5. Approval and lawyerYour lawyer pays the creditors directly from the mortgage advance, so the balances are cleared rather than handed to you to clear.
  6. The part that decides whether it workedKeeping the cards clear. I will talk to you about this plainly, because a second consolidation in five years is a much worse position than the first.
FAQ

Honest answers

Can I refinance my mortgage to pay off credit card debt in Toronto?
Usually yes, if you have equity. Most lenders will refinance up to 80% of your home's appraised value, and the difference between that ceiling and your current balance is what is available to clear debts. Your lawyer pays the creditors directly on closing. You also have to qualify for the larger mortgage under the stress test, which is where these files most often stall.
Is a debt consolidation mortgage better than a consumer proposal?
If you own a home with meaningful equity, usually yes — a consolidation pays creditors in full, protects your credit from the damage a proposal causes, and keeps your equity. A proposal counts your home equity and a trustee will generally expect it contributed, so it is often not attractive to homeowners anyway. If there is not enough equity or income, a proposal may genuinely be the better route, and that is worth hearing from a trustee.
Can I get a consolidation mortgage with bad credit?
Often yes. Alternative and B-lenders price for credit history rather than declining on it, and when the mortgage is clearing the very debts that damaged your credit the file frequently makes sense to an underwriter. Expect a higher rate and plan to move back to an A-lender at renewal once the file has seasoned.
Can I refinance to pay CRA tax debt in Ontario?
Yes, though not usually with a big bank. CRA debt accrues interest and CRA can register a lien against your property, so clearing it is often urgent. Several alternative lenders handle these files routinely and will work from a CRA payoff letter. It is one of the more common reasons people come to me.
Will consolidating my debt hurt my credit score?
Usually the opposite, within a few months. There is a credit inquiry and a new mortgage on your file, which causes a short-term dip, but paying card balances to zero sharply reduces your credit utilisation, which is a major scoring factor. The risk to your score is not the consolidation — it is running the balances back up afterwards.
How much equity do I need to consolidate debt?
Enough that 80% of your home's value exceeds your current mortgage balance by more than the debts you want to clear, plus costs. On a $900,000 home with a $550,000 mortgage, the 80% ceiling is $720,000, leaving roughly $170,000 before penalty and closing costs. If you are already near 80%, consolidation through a refinance will not be available, though a second mortgage might.
Will I lose my house if I consolidate and then struggle?
This is the right question to ask, and the reason I am careful about these files. You are moving unsecured debt onto your home, so debts that previously could not threaten your house now sit behind it. That is exactly why I will not recommend a consolidation where the consolidated payment looks tight — and why, if the numbers do not genuinely work, I will point you to an insolvency professional instead.

Related

RefinancingThe mechanics of accessing your equity.Home equity and HELOCAccessing equity without breaking your mortgage.Mortgage renewalIf your term is ending, consolidating at renewal avoids a penalty.Breaking a mortgage earlyWhat a mid-term consolidation costs you.Self-employedConsolidating on business income.

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Aleksey Tsoy · Mortgage Agent (Level 1) · Licence #M20001520 · Centum Financial Services LP · Brokerage Licence #13054