If you're carrying $40,000 across credit cards and loans, you might be paying $1,200 a month and barely denting the principal. Rolled into a mortgage at today's rates, that same debt can cost a few hundred a month. That arithmetic is why debt consolidation is one of the most common, and most life-changing, refinances we arrange.
How it works
You refinance up to 80% of your home's value, and the new mortgage pays out your high-interest debts on closing (usually directly, via your lawyer). One payment, one rate, one place to look. Alternatives when breaking the mortgage doesn't make sense: a HELOC or a second mortgage can consolidate without touching a great first-mortgage rate.
A realistic example
A homeowner with a $350,000 mortgage and $60,000 in credit cards and loans refinances to $410,000. The cards were costing roughly $1,400/month in minimums; the mortgage increase costs about $340/month. Monthly relief: around $1,000, plus a credit score that starts climbing the month the card balances report as zero.
The honest trade-offs
- You're converting unsecured debt into debt secured by your home. Miss payments and the stakes are higher.
- Stretched over 25 years, cheap debt can still cost more in total interest, unless you use the freed-up cash to accelerate the mortgage.
- Mid-term refinancing may trigger a prepayment penalty. Sometimes waiting for renewal is the smarter play; sometimes the monthly bleeding justifies moving now. Do the math, don't guess.
The discipline clause
Consolidation fails one specific way: the cards get paid off, then filled again. The homeowners who win treat consolidation as a one-time reset, cards get closed or limits slashed, and part of the monthly savings goes to prepaying the mortgage. Consolidate the debt and the habit, and the strategy is genuinely transformative.
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