How Much Can You Save with Debt Consolidation?

At 360Lending, we speak with Ontario homeowners every single day who feel trapped by a mountain of high-interest debt. They own a valuable asset—their home—but their cash flow is choked by minimum payments on credit cards, personal loans, and other costly debts.

The question we hear most often is: “How much money can I actually save?”

The short answer is: Potentially thousands of dollars per year and hundreds of dollars in monthly cash flow.

Debt consolidation, especially when leveraging your home equity, isn't just a band-aid solution. It’s a powerful, calculated financial restructuring strategy. It swaps expensive, unsecured debt for a single, low-interest, secured mortgage payment. This is the single most effective way to cut your interest costs, simplify your finances, and take back control of your budget.

The core value of this guide is to give you the clear, straightforward answers you need as an Ontario homeowner. We will show you the exact mechanics of consolidating debt using a Home Equity Loan, HELOC, or Refinancing, so you can see the path to a lower monthly payment and accelerated debt freedom.

Your Problem: The High Cost of Unsecured Debt

As an Ontario homeowner, your primary pain point is the interest rate trap of unsecured debt. High-interest credit cards (often 19.99% or higher) and personal loans (13%+) demand a huge portion of your income, leaving you feeling like you’re running in place.

Let’s look at a common scenario we see at 360Lending involving multiple debts like two credit cards, a personal loan, and an auto loan buyout, totaling about $60,000 in debt. If those debts had an average interest rate of around 13.7%, you could easily be paying $1,500 per month just to service them. That $1,500 is a significant financial burden, and the high-interest rates mean that for months, sometimes years, you are paying mostly interest, not principal. This is where the home equity advantage comes in.

Trading High-Interest Debt for Low-Cost Equity

Your home equity—the difference between your home's value and your mortgage balance—is your best asset for solving this problem. The current market allows us at 360Lending to access rates that are dramatically lower than unsecured debt rates. Depending on your chosen path, these secured debt options can be as low as the 4% to 5% range for refinancing, or start at 7.49% for a HELOC or 7.99% for a Home Equity Loan for a second mortgage solution.

When you roll that $60,000 of high-interest debt into your mortgage, look at the potential impact:

We can replace that debt, which currently costs you $1,500 per month at a high rate, with a new payment that increases your mortgage outlay by only approximately $365 per month (based on a Refinance at a 5% rate over 25 years).

The math is transformative: You’ve just freed up over $1,135 every month in cash flow!

A cash flow increase of over $1,100 per month is significant. That money can go into an emergency fund, an RRSP, RESP, or simply back into your pocket to reduce stress. You are using the low-cost interest rate of secured debt to attack the high-cost interest of unsecured debt.

This is the fundamental power of debt consolidation through home equity.

How to Access Home Equity for Consolidation

In Ontario, you have three primary methods to access up to 80% of your home's value for debt consolidation. At 360Lending, we analyze your current mortgage, equity, and financial goals to recommend the perfect fit.

1. Cash-Out Refinance (The Lowest Rate Option)

This is the most popular route for significant debt and involves replacing your existing mortgage with a new, larger one. We secure a new mortgage for your original principal plus the extra funds needed for debt consolidation. All high-interest debts are paid off instantly.

Current Rate Advantage: Refinancing with a bank or B-Lender often provides the lowest rate, currently sitting in the 4% to 5% range.

Best For: Homeowners whose current mortgage term is nearing renewal, or who have a high-enough interest rate that the savings from a new, lower-rate consolidated mortgage easily outweigh the penalty to break their current one.

2. Home Equity Line of Credit (HELOC)

This is a flexible, revolving line of credit secured by your home. You are approved for a credit limit (up to 65% of your home's value, or up to 80% combined with your first mortgage) and only pay interest on the money you use. The interest rate is variable.

Current Rate Advantage: HELOC rates currently start from 7.49%.

Best For: Those who need to pay off debts over time, or those who want an emergency fund available after the initial consolidation without disrupting their first mortgage.

3. Home Equity Loan (Second Mortgage)

This is a separate, second mortgage registered against your property. You receive a fixed lump sum, with a fixed interest rate and a clear repayment schedule. Your original first mortgage remains untouched.

Current Rate Advantage: Home Equity Loan rates currently start from 7.99%.

Best For: Homeowners who have an extremely low rate on their first mortgage that they absolutely do not want to break. The second mortgage provides a structured, fixed payment that never changes.

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The Hidden Benefits of Debt Consolidation

The benefits go far beyond just saving on interest:

Stress Reduction and Simplicity: Instead of juggling five to ten different due dates and worrying about penalties, you have one single, predictable monthly payment to manage. This psychological relief is often priceless.

Credit Score Improvement: By paying off large credit card balances, you drastically lower your Credit Utilization Ratio. This leads to an improved score within 60-90 days.

A Fresh Start: Debt consolidation is a powerful opportunity to reset your financial habits. Once the high-interest accounts are clear, you can focus on a debt-free lifestyle, redirecting your cash flow toward savings and investments.

Important Considerations for Debt Consolidation

As your trusted broker at 360Lending, we believe in providing the whole truth. While debt consolidation is powerful, there are factors to weigh:

The Penalty: If you choose to Refinance and break your existing mortgage term, there will be a prepayment penalty. Our job is to run the math to ensure the long-term interest savings vastly outweigh this one-time cost.

Financial Habits: Debt consolidation is an incredibly effective tool for managing debt, but it only addresses the symptoms of overspending, not the root cause. When you roll high-interest debt into your mortgage, you must commit to changing the habits that created the debt in the first place. Failing to stick to your budget after consolidating will put you at risk of accumulating new, high-interest debt while simultaneously carrying a larger, consolidated mortgage, undermining the entire benefit of the strategy.

Alternatives: Why Home Equity is Your Best Tool

While we specialize in home equity solutions, we know other options exist, but they are rarely as effective for a homeowner.

Personal Loan Consolidation: Personal loan rates are much higher (13%+) than mortgage rates and loan amounts are often capped, preventing you from consolidating all your high-interest debt.

Doing Nothing: Continuing to make minimum payments on high-interest debt is the most expensive choice. The cycle of compound interest will cost you thousands more over time and delay your financial freedom indefinitely.

For homeowners in Ontario, leveraging your equity is not just an option—it’s the smartest strategic move to take immediate and drastic control of your financial future.

Ready to See Your Real Savings?

At 360Lending, we cut through the confusion and get straight to your bottom line. You don't have to guess how much you can save. You have the right to a clear, customized financial plan.

Our proprietary system allows us to instantly assess your home's equity, review your current debts, and calculate your new, lower monthly payment options.

Visit our consolidation loans product page to:

See how much can you borrow: A calculation of the maximum equity you can access.

Estimate your monthly savings: A side-by-side comparison showing exactly how much cash flow your consolidation plan will free up.

Connect with a broker: Schedule a call with our team to get approved within 24 hours.

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