Debt
Debt Consolidation Calculator
Compare your current high-interest balances to a new mortgage or second mortgage and see whether consolidating actually saves you money.
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What Does “Using Home Equity” Mean?
Using home equity to pay off debt typically involves borrowing against the value of your home to consolidate higher-interest debt such as:
- Credit cards
- Personal loans
- Lines of credit
- Tax arrears
This is usually done through a refinance, HELOC, or second mortgage, replacing multiple high-interest payments with one lower-interest payment.
Why January Is a Common Time for Homeowners to Do This
January creates a natural decision point:
- Holiday balances are now visible
- New budgets and financial goals are being set
- Home values are often already known
- Acting early prevents interest from compounding all year
For many homeowners, waiting until “later” means paying thousands more in interest unnecessarily.
When Using Home Equity Can Make Sense
Using home equity may be a smart move if:
- Your unsecured debt has high interest rates
- You’re managing multiple payments each month
- Cash flow feels tight despite stable income
- You have sufficient equity and a clear repayment plan
Lowering interest and simplifying payments can reduce stress and improve long-term financial stability.
When It May Not Be the Right Move
Home equity consolidation isn’t for everyone.
It may not be ideal if:
- Spending habits aren’t under control
- You plan to sell in the short term
- You’re consolidating without addressing the root cause of the debt
Turning unsecured debt into secured debt requires discipline—otherwise, the problem simply reappears later.
Understanding Your Options as a Canadian Homeowner
Common equity-based consolidation options include:
- Mortgage refinance – resets your mortgage with additional funds
- HELOC – flexible but requires strong self-control
- Second mortgage – often used when refinancing isn’t possible
Each option affects payments, interest, and flexibility differently.
Before choosing one, it’s important to compare your current payments with a consolidated scenario.
A quick way to do this is by using a Debt Consolidation Calculator to see whether consolidating with home equity would actually reduce your monthly payments and interest costs.
The Bottom Line
Using home equity to pay off debt in January can be a strategic financial reset—but only when done intentionally.
The goal isn’t just lower payments; it’s long-term financial clarity and control.
Running the numbers first helps ensure you’re making a decision that supports your financial future, not just short-term relief.