Why Pay 20% Interest When Your Mortgage Rate is a Fraction of That?
If you're paying down credit cards, personal loans, or lines of credit while carrying a mortgage, there's a good chance you're paying more interest than you need to. I'll show you the actual numbers — before you decide whether it's worth it.
Using equity to eliminate high-interest debt
Your home equity is one of the lowest-cost sources of borrowing available. Credit cards charge 19–22% interest. Personal loans charge 8–15%. Your mortgage rate is typically 4–7%.
By refinancing to access equity and rolling high-interest balances into your mortgage, you can dramatically reduce the total interest you pay — and often lower your total monthly outgoing at the same time.
The important caveat
Consolidating short-term debt into a 25-year mortgage means you may pay more total interest if you don't adjust your repayment strategy. I model both scenarios so you can make an informed decision.
Types of debt commonly consolidated
Most common. Rolling even one card balance into your mortgage generates significant monthly savings.
Often structured on 3–7 year terms with high monthly payments.
Extending a car loan into a mortgage can reduce monthly payments, but weigh total interest carefully.
HELOCs excluded — they're already secured against your home.
Things to consider before consolidating
Available equity
You can refinance up to 80% of your home's appraised value. The difference between that limit and your current mortgage balance is what's available.
Prepayment penalties
Breaking your mortgage early to refinance may trigger a penalty. I calculate whether the savings from consolidation outweigh the penalty cost.
Mortgage term timing
Refinancing at renewal avoids penalties entirely. If your term is ending soon, it's worth waiting rather than breaking early.
Amortisation impact
Adding debt to your mortgage may extend your amortisation. Keeping extra payments up eliminates this risk.
Spending patterns
Consolidation only works if the underlying spending that created the debt changes. I'll flag this honestly — it's not right for everyone.
Lender assessment
The new mortgage must still pass the stress test. I confirm qualification before we proceed so there are no surprises.
Debt consolidation questions answered
How much can I save by consolidating debt into my mortgage?
It depends on your debt balances, current interest rates, and your mortgage situation. As a rough example: consolidating $30,000 of credit card debt at 20% into a mortgage at 5% could save $4,500 per year in interest. I'll run your specific numbers before you decide anything.
Will consolidating debt hurt my credit score?
Initially, refinancing involves a credit check which may cause a small dip. However, paying off revolving balances (credit cards) typically improves your credit score over time by reducing your utilisation ratio.
Is debt consolidation the same as refinancing?
Debt consolidation through your mortgage is a form of refinancing — you're replacing your existing mortgage with a new, larger one to access equity. The process, timelines, and documentation requirements are the same as a standard refinance.
What if I don't have enough equity?
If you don't have sufficient equity to consolidate all your debts, there are still options — partial consolidation, a HELOC, or a debt repayment strategy that prioritises the highest-rate balances first. I'll help you find the most effective path for your situation.
Ready to Get Started?
Fill out a quick application and I'll be in touch within one business day. No commitment, no pressure — just an honest conversation about your options.