Debt Consolidation & CRA Arrears
This is one of the most common reasons people use their home equity — and one of the easiest to get wrong.
Consolidation only makes sense if the arithmetic actually improves your position. Rolling a credit line, card balances, a car payment and CRA debt into one payment can be a genuine relief. It can also just move the problem somewhere more expensive. We check the numbers — including any penalty to break your existing mortgage — before recommending it either way.
The answers in this centre
- I owe the CRA. Can a second mortgage clear my tax arrears?
- Can I use my home equity to consolidate my debts into one payment?
More answers being added — what breaking your mortgage costs, and whether the interest is ever tax deductible.
The test that matters
Most people arrive asking whether they can. The better question is whether they should, and there’s a straightforward test.
- Does the monthly position genuinely improve? Often the real goal is cash flow, not total interest saved — and that’s a legitimate goal, as long as it’s the stated one.
- What does breaking the existing mortgage cost? Variable is usually around three months’ interest. Fixed is the interest rate differential, which can be a much bigger number.
- Will the debt rebuild? Consolidation that clears cards which are full again in eighteen months has made things worse, not better.
CRA debt is different
It’s the one debt banks won’t touch. That single fact explains why so many CRA situations end up being solved with a second or private mortgage rather than through an A lender.
And clearing it does more than tidy your balance sheet — it stops penalties accruing and takes the collection pressure off. The full answer is here.
What to do next
Send me the list — what you owe, to whom, and what each payment is. I’ll run the arithmetic and show you whether consolidating actually helps.
If it doesn’t, I’ll tell you that too.
Talk it through → · Back to all answers →
General information about Ontario mortgages — not financial, legal, tax or mortgage advice. Every file is reviewed individually.