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Refinancing for Debt Consolidation in Edmonton: Is It Worth It?
June 11, 2025 | Posted by: Jeff Chin
If you're carrying multiple debts, credit cards, lines of credit, car loans, it can feel overwhelming. High interest rates, multiple due dates, and the mental load of juggling payments can make it hard to stay ahead. That’s where refinancing your mortgage for debt consolidation can be a powerful solution—especially for homeowners in Edmonton.
But is it the right move for you? Let’s break it down.
What Is Debt Consolidation Through Refinancing?
Debt consolidation involves combining several high-interest debts into one single loan, typically your mortgage. When you refinance your mortgage, you replace your current loan with a new one that has a different interest rate, term, or payment structure. In the case of debt consolidation, you refinance for a higher amount than what you owe on your mortgage, and use the extra funds to pay off your other debts.
Why Edmonton Homeowners Consider Refinancing for Debt Consolidation
Here are a few reasons why refinancing to consolidate debt can make sense in the Edmonton housing market:
Lower Interest Rates
Mortgage rates are often much lower than credit card or personal loan rates. Refinancing at 5-6% can save you significantly compared to credit cards charging 19% or more.
Simplified Payments
Instead of managing five or six separate monthly bills, you’ll only have to make one mortgage payment, making budgeting easier and reducing the chance of missing a payment.
Boosted Cash Flow
By lowering your overall monthly payment, you can free up cash for savings, investments, or emergencies.
Faster Debt Repayment
Consolidating under a mortgage structure with better terms can help you pay off what you owe faster, especially if you stick to an aggressive repayment plan.
When Does Refinancing for Debt Consolidation Not Make Sense?
It’s not a one-size-fits-all solution. Here are some caution flags:
You Plan to Move Soon
If you're selling your home in the next 1–3 years, the cost of refinancing (legal fees, penalties, etc.) may outweigh the benefits.
You Don’t Address Spending Habits
Consolidating debt only helps if you don’t rack up new debt again. Otherwise, you risk having high mortgage payments and more consumer debt on top.
You Have a High Penalty for Breaking Your Current Mortgage
In Canada, some fixed-rate mortgages come with steep prepayment penalties. Make sure the math works in your favor.
Edmonton Example: How Much Can You Save?
Let’s say you owe:
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$20,000 on credit cards at 19.99%
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$10,000 on a car loan at 8.99%
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$5,000 on a line of credit at 11.5%
That’s $35,000 in total debt. If you refinance your mortgage to roll this in at 5.5%, your monthly payment could drop by hundreds, and you’ll save thousands in interest over time.
What Are the Costs of Refinancing in Edmonton?
When refinancing, expect:
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Legal fees ($1,000–$1,500)
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Appraisal fee (if required)
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Mortgage discharge fee
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Prepayment penalty (for breaking a fixed mortgage early)
But remember: the long-term savings often offset these upfront costs—especially when consolidating high-interest debt.
Alternative Options: Not Ready to Refinance?
If you're unsure about refinancing, consider other ways to leverage your home equity. For example, a Home Equity Line of Credit (HELOC) allows you to borrow against your home at lower rates—without changing your existing mortgage.
For more ideas, check out our article:
5 Smart Ways to Use Home Equity in Edmonton Without Risking Your Home
Is Refinancing for Debt Consolidation Worth It?
It depends on your goals. If you:
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Own a home in Edmonton with sufficient equity
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Have high-interest debt
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Want to simplify your financial life and save on interest
…then yes, refinancing could be a smart and strategic move.
But you need the right plan, and the right advisor, to make it work.
Speak to an Edmonton Mortgage Expert
Before making any decisions, talk to a mortgage broker who understands your unique situation. Steven Boodoo has helped countless Edmonton homeowners consolidate debt, improve their cash flow, and achieve financial peace of mind.
Get personalized guidance now:
Contact Steven Boodoo
Your future self will thank you.
