Debt Consolidation Calculator

What the Debt Consolidation Calculator does

This calculator rolls your credit cards, line of credit and any fixed installment debt into your mortgage and shows exactly what changes: your blended interest rate, your monthly payment, and the cash flow that gets freed up every month. It also checks the 80% loan-to-value ceiling that limits how much debt can actually fit, and tells you which debts to prioritise if not everything does.

What separates this from a typical consolidation pitch is the section most calculators skip: the honest total-interest comparison. Spreading high-rate consumer debt over a 25-year mortgage amortization almost always costs less per month — and very often costs more in total interest — than paying the same debts off on their current, much shorter schedule. This calculator shows both numbers, plus a third option that fixes the problem.

• Your monthly payment before and after, and the cash flow freed
• Your weighted average interest rate before and after consolidation
• The maximum amount you can consolidate under the 80% LTV ceiling, and which debts to prioritise if not everything fits
• The honest interest comparison: staying the course vs the new minimum payment vs an accelerated payoff
• A break-even calculation on the penalty and closing costs involved

The key variables that move the answer — and how lenders treat them

Four things decide whether consolidating actually helps you, and they interact in ways that are easy to miss when you only look at the monthly payment.

• The rate gap — the entire case for consolidation rests on the difference between what you are paying now (often 20% or more on credit cards) and your mortgage rate. The bigger that gap, the more cash flow consolidation frees up, regardless of what happens to your amortization.
• Amortization length — this is the variable that turns a good idea into a mixed one. Spreading debt over 25 years lowers the payment dramatically, but it also means you are paying interest on that debt for 25 years instead of the 2 to 5 years a typical installment loan or aggressive card payoff would take — which is exactly why the total-interest comparison matters more than the monthly payment alone.
• Loan-to-value — lenders will not lend past 80% of your home's value on a standard refinance. If your consumer debt plus your existing mortgage plus fees exceeds that ceiling, only part of the debt can be rolled in, and the highest-rate debt should generally be prioritised for the room that exists.
• What you do with the freed-up cash flow — lenders cannot control this, but it decides everything. Consolidating and then continuing to make your old, higher total payment against the new mortgage recovers most of the total-interest cost of a longer amortization; consolidating and dropping to the new minimum payment does not.

How debt consolidation is actually calculated

The weighted average rate before consolidation is the balance-weighted blend across every debt: sum(balance × rate) ÷ sum(balance). This is the number that is actually being replaced when you consolidate, not any single debt's rate.

The new mortgage payment is calculated with the standard Canadian formula, P × i ÷ (1 − (1 + i)^−N), using semi-annual compounding on the periodic rate since this becomes a real registered mortgage. The specific portion of that payment attributable to the consolidated debt is isolated by comparing the payment on the full new balance against the payment on your existing mortgage balance alone, at the same rate and amortization — because the level-payment formula is linear in principal, that difference is exact, not an approximation.

For the honesty comparison, the "stay the course" total interest treats each existing debt as a fixed-payment loan at its current rate and payment, solved for the number of periods to reach zero using the same amortization mathematics — not a naive assumption. The "consolidate" total interest applies that same formula to the debt-only increment, amortized at the new mortgage rate over the full new amortization.

• Weighted rate: sum(balance × rate) ÷ sum(balance)
• New mortgage payment: P × i ÷ (1 − (1 + i)^−N), i from semi-annual compounding
• Debt-only payment increment: payment(mortgage + debt) − payment(mortgage alone), exact by linearity
• Periods to payoff at a fixed payment: solved directly, not assumed from a stated term

What you get from this calculator, and how lenders use these numbers

These outputs map directly onto what a broker checks before recommending — or advising against — a debt consolidation refinance.

• Monthly cash flow freed — the headline figure and the reason people search for this calculator, but only half the story without the interest comparison beside it.
• Loan-to-value after consolidation — determines whether the deal is even possible at standard rates, or whether it needs a second mortgage or B-lender for the portion that does not fit.
• Total interest, stay-the-course vs consolidate — the number that keeps this calculator honest. A lender or broker who only shows you the lower payment without this comparison is not giving you the full picture.
• Accelerated payoff scenario — the productive use of the interest comparison: keep making your old total payment against the new mortgage and you get the lower rate without paying more in total interest, often clearing the debt years earlier than the stated amortization.

Using your results well

If the cash flow freed matters to your monthly budget right now, take it — that is a legitimate and often necessary reason to consolidate. But treat the freed-up amount as available for the accelerated payoff scenario if your budget allows it later, rather than a permanent reduction in what you pay toward this debt. The difference between the minimum-payment outcome and the accelerated outcome shown above is usually tens of thousands of dollars.

This calculator does not model your new mortgage qualifying position, your credit score impact, or whether a lender will actually approve the file — those depend on income, credit history and the specific lender's policies. It also assumes every debt is eligible to roll into a residential mortgage; registered tax debt and some specialty debts sometimes require a different structure.

• Use the freed-up cash flow deliberately — either for your budget or to accelerate the payoff, not both by default
• If not everything fits under 80% LTV, prioritise the highest-rate debt for the room you have
• Compare the break-even on fees against how long you plan to stay in the home
• Ask about a second mortgage for any debt that does not fit, rather than leaving it at its current rate

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