The Truth About Debt Consolidation in Ontario: What the Banks Won’t Tell You

getmortgaged
Jan 9
3 min read

If you’re a homeowner in Ontario feeling squeezed by credit cards, car loans, lines of credit all while juggling a mortgage, you’re not alone. Thousands of Canadians in their 30s to 50s are stuck playing financial whack-a-mole each month.

And while “debt consolidation” gets thrown around like a cure-all, most people have no clue what it really means, or how to use it strategically.

What Is Debt Consolidation, Actually?

At its core, debt consolidation means taking multiple high-interest debts, like credit cards or personal loans and rolling them into a single, lower-interest payment.

For homeowners, this often means using home equity to do the heavy lifting. That could look like:

Refinancing your mortgage to pull out equity
Using a HELOC (Home Equity Line of Credit)
Using a product like Manulife One to combine everything into one flexible, interest-saving account

Done right, consolidation simplifies your life and cuts your interest cost dramatically. Done wrong? It just frees up space to rack up more debt.

The Trap Most People Fall Into

Here’s what the banks won’t tell you:

Consolidating debt doesn’t fix your spending habits. It just gives you breathing room temporarily.

Most homeowners refinance, wipe out the credit cards... and then six months later? The cards are maxed again. Now they’ve got more debt, and no Plan B.

This is why we don’t just “consolidate.” We restructure.

Restructure > Consolidate

A true debt restructure looks at your entire financial ecosystem:

Where your money flows
How you use credit
Which debts are tax-deductible (spoiler: most aren’t, but some can be)
Whether your mortgage setup is helping or hurting you

We use tools like:

Cash flow mapping (to plug leaks)
Mortgage product optimization (like Manulife One or tiered HELOCs)
Debt layering (to lower interest and pay off strategically)

The Math: Why Timing Matters

Let’s put numbers to this. Say you’ve got:

$50,000 in credit card/loan debt
Paying 19.99% interest
Monthly payments = ~$1,500 (minimums only)

You refinance your mortgage and roll that into a new 5.5% rate over 25 years. Payments drop to ~$300/month.

📉 Here's what that looks like over time:

Total Interest Paid:

Option	Interest Rate	Monthly Payment	Interest Over 10 Years
Credit Cards	19.99%	$1,500+	~$42,000+
Mortgage Refi	5.5%	~$300	~$14,000

That’s a $28,000+ savings in interest alone, not counting stress relief.

But Wait, Isn’t Rolling Debt Into My Mortgage Risky?

Only if you don’t change the habits that got you into high-interest debt to begin with.

That’s why when we work with clients, we don’t just help them consolidate. We set up:

Cash flow plans
Emergency fund buffers
Spending filters that stick

It’s not about being “frugal.” It’s about being in control.

When Does It Make Sense?

✅ You own a home with at least 20% equity

✅ You’ve got $20,000+ in non-mortgage debt

✅ Your mortgage is up for renewal (or you’re willing to break it strategically)

✅ You want to simplify and get back on offense financially

When It Might Not Be Right (Yet)

❌ You’re living paycheque to paycheque and have zero equity

❌ You’re planning to sell in the next 12 months

❌ You’re using this to justify more spending

Bottom Line: Don’t Let High-Interest Debt Steal Your Future

The biggest mistake Ontario homeowners make? Waiting too long to do anything. Interest compounds daily. So does stress.

The good news? You don’t have to figure it out alone.