Direct answer
Start with the complete cost.
Refinancing can reduce the interest rate on some debts, but it does not erase them. It may extend repayment and converts unsecured debt into debt secured by your home. Compare it with a repayment plan, consolidation loan and non-profit credit counselling.
Why this matters
The payment is only one outcome.
One payment can feel easier while concealing a higher long-term cost. A useful plan addresses both the existing balances and the reason they accumulated.
Paths to compare
There may be more than one useful route.
- Use a debt avalanche or other structured repayment plan.
- Discuss options with a reputable non-profit credit counsellor.
- Compare an unsecured consolidation loan.
- Use home equity only when the full cost and home risk are justified.
When mortgage financing may help
It may help when the interest saving is material after every fee, the repayment period stays disciplined, and the household can avoid rebuilding balances.
When it may not help
It may not help when spending still exceeds income, the plan relies on rising home values, or the lower payment comes mainly from decades of extra repayment.
Risks and trade-offs
Pressure-test the appealing option.
- Your home becomes security for debts that may previously have been unsecured.
- A longer repayment period can outweigh a lower rate.
- Available credit can be reused, leaving both mortgage and card balances.
Decision checklist
Gather the evidence before deciding.
- ✓Every balance, rate and minimum payment
- ✓Mortgage penalty and refinancing costs
- ✓Total interest under a fixed repayment date
- ✓A realistic post-consolidation budget
- ✓Alternatives reviewed with an appropriate professional