5.3.7 Should you put debt on a mortgage?

If you have higher-cost debts such as a credit card or line of credit, should you request a larger mortgage in order to pay off these debts? With the lower interest rate of a mortgage, it may be attractive to use any mortgage credit you have available to lower your consumer debt. This could increase your mortgage payments while reducing your consumer debt payments.

But using mortgage credit to pay consumer debt is not always a good choice.

• If you're able to pay off the higher-cost debt quickly, you'll likely pay less interest than you would with a larger mortgage spread over a longer time.
• If your mortgage is insured, you'll have to pay for insurance on the whole debt, which adds to the overall cost. This could be a very large extra cost if you have to get mortgage default insurance that you would not have needed with a smaller mortgage.
• If you move your credit card debt to your mortgage and then charge more on your credit card, you'll be deeper in debt and pay even more interest.

Don't take on more higher-cost debt, and don't borrow more than you can afford. If you cannot repay the amounts you have borrowed, plus interest, you could lose your home.

For more information about borrowing on your home equity, see the Financial Consumer Agency of Canada's information on Mortgages.