How rolling high-interest debt into your mortgage actually works in Alberta — how much you can borrow, what it costs, the penalty math, and how to tell whether it's the right move. No jargon, no pressure.
The basics
A debt-consolidation refinance replaces your current mortgage with a new, larger one. The extra amount is used to pay off your high-interest debts — credit cards, lines of credit, car loans, tax arrears — so they're cleared the day the mortgage funds. You walk away owing more on your mortgage but nothing on those other debts, and you make one payment instead of many.
Because a mortgage is secured by your home, it carries a far lower interest rate than unsecured debt. That rate gap is the entire reason consolidating can save you money — and the reason it has to be done thoughtfully, since you're moving that debt onto your home.
How much you can roll in
On a conventional refinance in Canada you can borrow up to 80% of your home's appraised value. Whatever room exists between that ceiling and your current mortgage balance is what's available to pay out other debts (plus closing costs and any penalty).
Home worth $500,000 × 80% = $400,000 you can borrow. If your current mortgage is $300,000, that leaves up to roughly $100,000 to consolidate debt, cover costs and any penalty. Your actual room depends on the appraisal and your qualification. Get your exact number →
What you can clear
The biggest win — card rates often sit near 20% or higher. Clearing these first saves the most interest.
Unsecured LOCs and higher-rate secured lines can be folded into the mortgage at a lower fixed or variable rate.
Vehicle and installment loans with mid-teens rates are common candidates when there's room.
Retail cards and other high-rate balances that never seem to shrink under minimum payments.
Owing the CRA? Consolidating can clear it before interest and collection pressure build.
Old balances in collections can often be paid out as part of the same refinance.
The cost side
Consolidating isn't free, and I'd rather you hear that up front. There are three things to weigh against your interest savings:
If you break your mortgage before its term ends, your lender charges a penalty — three months' interest, or the larger IRD (interest rate differential) on fixed terms. This is usually the biggest cost, and it varies a lot by lender.
Appraisal, legal and possibly discharge fees. Often a few thousand dollars, and frequently rolled into the new mortgage.
Spreading old debt over 20–25 years lowers the payment but can raise total interest — unless you keep the freed-up cash flow aimed at the mortgage. The plan matters.
The right question isn't "is there a penalty?" — there often is. It's whether the interest you stop paying on 20% debt outweighs that penalty. Frequently it does, and quickly. Sometimes it doesn't, and I'll tell you so.
Is it right for you?
You carry meaningful high-interest balances, you have at least ~20% equity, the monthly cash-flow relief is real, and you're committed to not re-running the cards back up. The bigger the rate gap and the balances, the stronger the case.
Your penalty is large and your term is nearly up (wait for renewal), your balances are small enough to clear in a year or two anyway, or the habit that created the debt hasn't changed. Consolidating a spending problem just resets the clock.
Bruised credit, self-employed, or already been turned down by your bank? Consolidation still works — through alternative or private lenders. See how prime, alternative and private lenders fit →
A free debt review takes about 20 minutes. I'll run your before-and-after and give you a straight answer.