Consolidating debt within a mortgage: Good idea?

Recently I showed a close friend of mine how to consolidate their high-interest debt into their mortgage to reduce their overall interest rate and free up hundreds of dollars in cash flow every month. Debt consolidations are nothing new, but they only work if the person is not simply looking for a quick fix. In this particular case, $410 was freed up in monthly cash flow and the refinanced mortgage interest rate was lower. In many situations, however, consolidating debt into a mortgage comes at a cost: You must break your current mortgage and the high-interest debt then gets amortized into the new mortgage balance at a lower interest rate. Your overall debt goes up by a few thousand dollars (the cost to break the term and perhaps paying a CMHC premium on the increased balance on the mortgage), the rate of interest you pay overall goes down, but those high-interest debts are now being paid off over much longer periods of time.

So what's better? Well with today's low rates, the answer more often than not is, 'Yes', but to be sure contact me I'll do the math for you.  Micah Verceles Mortgage Consultant 604 897 8927 

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