Looking for Debt Consolidation Options in Ontario?

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If you’re juggling credit card payments, lines of credit, or personal loans, you’ve probably looked into debt consolidation as a way to simplify things—and hopefully save money.

The idea is simple: combine all your high-interest debts into one new loan with a lower rate and a single monthly payment. This can lower your stress, improve your cash flow, and help you pay off your debt faster.

But who actually offers these loans in Canada? And what’s the best option—especially if your credit score isn’t perfect?

Do Canadian Banks Offer Debt Consolidation Loans?

Yes, they do. In fact, all of Canada’s major banks offer personal loans that can be used to consolidate debt. These include:

RBC (Royal Bank of Canada)

TD Canada Trust

Scotiabank

CIBC

BMO (Bank of Montreal)

National Bank

Plus many credit unions and online lenders

These loans are usually unsecured personal loans, meaning you don’t have to put up any collateral (like your home). The loan is based on your credit score, income, and debt history.

You’ll typically get a fixed term and fixed interest rate, with equal monthly payments for 1 to 5 years.

Catch #1: You’ll a Credit Score of 680+

While all the big banks offer debt consolidation loans, you’ll usually need a credit score of at least 680 to get approved—and even higher if you want a decent interest rate.

That can be a problem for people who are already struggling with debt.

If your credit is hurting because of missed payments or maxed-out credit cards, the banks may:

Decline your application

Offer a lower loan amount than you need

Give you a higher interest rate that barely saves you money

That’s why a lot of people who need consolidation the most can’t qualify through the banks.

Catch #2: Higher Rates for Bad Credit

Even if you don’t qualify with a big bank, there are lenders out there—like online providers or finance companies—that will offer personal loans to people with bad credit. But here’s the problem: the interest rates are often sky-high.

In many cases, these loans start at 20% or more, and some can go even higher depending on your credit score and debt history.

At those rates, you're not really saving money. In fact, you might end up in a worse position than before—because you're swapping one kind of high-interest debt for another.

These loans often feel like a quick fix, but they don’t solve the real problem. They don’t improve your cash flow, and they make it harder to catch up.

If you're dealing with poor credit and looking to consolidate, it's worth talking to a mortgage broker (if you own a home) or a non-profit credit counsellor before signing anything. There are better ways to get back on track.

Catch #3: Personal Loans Are Smaller

Personal loans have limits. Even if you get approved, the loan amount may not be enough to pay off all your debts.

Most bank personal loans are capped around $30,000 to $50,000, depending on your income and credit. And if you’re using more than 50% of your available credit (a common situation), your application may be flagged as high risk.

That’s where homeowners have a major advantage—because they can use the equity in their home to access better options.

Debt Consolidation for Homeowners

If you’re a homeowner in Canada, you don’t need to rely on a personal loan to consolidate your debt.

You can use your home equity to access lower-interest, higher-limit options like:

A HELOC (Home Equity Line of Credit)

A home equity loan

Or even a mortgage refinance

These options are secured by your property, which means lenders take on less risk—so you can qualify more easily, even if your credit isn’t perfect.

Homeowners Get Lower Rates and Higher Limits

Let’s look at what makes these secured products so effective for debt consolidation.

Lower Interest Rates

Secured loans like HELOCs and home equity loans usually offer much lower interest rates than unsecured personal loans or credit cards. This means more of your payment goes toward the principal, not interest.

Current HELOC rates from major banks (as of 2025) often start around prime + 0.50%—which is a lot lower than the 19%+ you’re paying on a credit card.

Easier to Qualify (Even with Lower Credit)

Because these loans are backed by your home, lenders are more flexible with credit scores. You may still qualify with a score in the 600s—or even the high 500s—especially if you work with a mortgage broker.

Higher Borrowing Limits

Most banks will only offer unsecured loans up to about $30K–$50K, but with a home equity product, you may be able to borrow $100,000 or more, depending on your available equity.

This means you can wipe out all your high-interest debt at once, instead of only chipping away at a portion.

Use a Mortgage Broker to Consolidate Debt

If you’re a homeowner and thinking about consolidating debt, your best first step is to speak with a mortgage broker.

Here’s why:

Brokers don’t just work with banks—they also have access to alternative lenders and private options that the public can’t access directly.

They can find the best product for your situation—whether that’s a HELOC, second mortgage, or refinance.

They’ll walk you through the whole process, run the numbers, and help you build a plan that makes sense.

Most importantly, they’ll help make sure that your new loan actually helps you get out of debt—not just delay the problem.

Debt Consolidation with HELOC vs. Refinancing

If you’re a homeowner, the two most common ways to consolidate debt using your home equity are a HELOC (Home Equity Line of Credit) or a mortgage refinance. Each has its pros and cons, depending on your goals and financial situation.

HELOC (Home Equity Line of Credit)

Works like a credit card with a much lower interest rate

Interest-only minimum payments, giving you cash flow flexibility

Reusable—once you pay it down, you can borrow again

Best if you want ongoing access to funds or expect to repay and reuse the credit

The downside? Because it’s revolving credit, you need the discipline not to rack it up again.

Mortgage Refinance

You replace your existing mortgage with a new, larger one and use the extra funds to pay off your debts

Fixed payment schedule with principal and interest, helping you stay on track

Lower rate than most unsecured options

Good for people who want a clean slate and a structured plan

Refinancing is more of a “one-and-done” approach—great if your goal is to fully eliminate debt and not borrow more.

Which Option Is Better for You?

If you don’t own a home and you have strong credit (680+), a personal loan from your bank might be a good short-term solution. You’ll get predictable payments, a lower rate than your credit cards, and you can start fresh.

But if you’re a homeowner—even if your credit isn’t perfect—using your home equity is almost always the better move.

Why?

Because you’ll:

Qualify more easily

Access more money

Pay much lower interest

Have a real plan to get out of debt faster

Looking to Consolidate Debt in Ontario?

Debt consolidation can be a game changer—but only if it's done right.

If you have good credit and no home equity, a personal loan from your bank or credit union could work. But if your credit has taken a hit—or if you own a home—there are better options available.

Secured debt consolidation products like HELOCs, home equity loans, or mortgage refinances:

Offer much lower interest rates

Give you access to larger amounts

Improve your monthly cash flow

Give you a realistic chance to pay off your debt for good

And if you’re a homeowner, working with a mortgage broker is the smartest move. They’ll review your credit, income, and equity—and then match you with the best lender and product to fit your goals.

A smart consolidation plan can reduce stress, cut your interest costs, and give you a clean financial reset. Just make sure you choose the right path—and the right people—to help you get there.