Consolidation

Tracy Head • January 30, 2023

Just over a year ago I shared my thoughts about whether it might make more sense to stay in your current home and renovate as opposed to jump into the frenetic housing market. I also talked about the logistics of paying off consumer debt (ie: credit cards, lines of credit, car loans) by refinancing your home to pay them out.


Towards the end of 2022 we certainly saw the housing market calm. Rates have increased exponentially and prices have softened. People are stepping back to think about whether buying a new or different home is in the cards for them.

Since the middle of December we have seen fixed rates start to come down.


I am working with several families who have renewals coming up this year. They are definitely feeling the pinch financially. Even though they are in fixed rate mortgages, with the prices of everything else increasing they are finding it more challenging to make ends meet.


I am not a huge fan of refinancing to pay off consumer debt. Although the interest rate will be lower on a mortgage than on credit cards or unsecured credit lines, you are taking a much longer time to pay off the debt. You are also eating into the equity in your home.


Sometimes, however, a careful look at your monthly expenses may show that refinancing to consolidate your debts is the right move.


As an example, last year I worked with a couple that found they were in over their heads.


Their mortgage balance was $285,000. Their previous rate was 2.79 per cent so their payment was $1318.23.


They had a car loan of $38,000 with a payment of $700.00 and combined credit cards and lines of credit totaling $65,000. Monthly payments between all of them came to about $1350.00.


I looked at several options for them. If they went with a straight renewal of their mortgage, the payment at the current rate of 4.79 per cent would be $1623.67.


If they wanted to roll all of the debt from the credit cards and lines of credit into the mortgage, their rate would be 5.34% and their monthly payment would be $2314.27.


Initially they were hung up on the difference between the two rates and the higher payment. The payment was almost $700.00 per month higher.


What we looked at was the total monthly cash flow. They were paying over 10 per cent interest on their credit lines, and 29.9 per cent on their cards. Their monthly commitments between the car loan and the other debt was $2050 per month.

$2050.00 plus $1623.67 came to $3673.67 monthly towards debt repayment.


Adding the $100,000 to their mortgage meant a monthly commitment of $2314.27. This meant they were paying out $1359.40 per month LESS for their debts. 


Another consideration was that they weren’t making any headway on their consumer debts at all. By just covering the interest they were on the never-never plan and getting incredibly discouraged by their situation.


Current guidelines allow clients to refinance to 80 per cent of the value of their home. For instance, if your home appraises at $500,000.00 you could refinance to a total of $400,000.00.


If you bought your home several years ago, it is likely the value has increased enough to allow for a refinance. Let’s say you bought your home ten years ago for $400,000.00.


Depending on the amortization and payment schedule you chose, let’s say your mortgage balance is now $300,000.00. The current market value of your home is $600,000.00.


This means, provided you qualify to carry the larger mortgage, you could refinance up to $480,000.00.


I don’t recommend maxing out your mortgage based on current property values. However, exploring whether using some of the equity in your home to repay your consumer debt, or better yet to renovate or expand your current home, might be something to think carefully about.


The hardest step in this process can be picking up the phone to get the ball rolling. Sometimes its hard to admit we are swamped or even drowning from the debt we have. We feel that others will judge us and I assure you that is not the case. You would likely be surprised to know how many people are in the exact same position.


If you are struggling I encourage you to reach out to a mortgage professional to see what options you may have. It might be a tough call to make, but the outcome may help you sleep better at night.

Tracy Head

Mortgage Broker

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Mortgage Options

By Tracy Head • November 1, 2025
In past columns I’ve covered when no means no and when no means maybe there’s another option. There are many aspects of my work that I love. One is that I learn something new each and every day. No two clients are the same and no two applications are the same. Some are easier than others to put together. Another thing I love is that we have so many options to consider when working on our files. I do find immense satisfaction when I tackle a complicated file and find a great solution for my clients. I am working with an amazing young couple as they build their portfolio of rental properties. They are relatively young but both work incredibly hard and really have their ducks in a row. The plot twist they have is that they both transitioned from salaried positions to being self-employed over the last year. Their credit scores are both in the high 800s (900 is a perfect score), they are both making substantial income, and they have saved over $100,000 for their down payment.  Seems like a slam dunk right? Because they don’t have two years of filed tax returns as self-employed business people our options are a bit limited. There is a program we use in this situation but their scenario does not fit within the guidelines. Their dream home just came on the market so they are wanting to buy and convert their current home to a rental property. This particular home came up in the neighborhood they really want to be in, and homes don’t come up very often. It is immaculate and has a legal suite. They had originally approached their bank and been told it was a hard no. I work with their realtor fairly often and she suggested they give me a call. Within 24 hours we had the approval in place for them. We ended up taking the application to an alternative lender for a two-year term. The interest rate is about .5 per cent higher than a chartered back and there is a 1 per cent fee charged. We weighed out the pros and cons of going this route versus holding off until their next tax returns are filed before purchasing another property. After chatting with their financial advisor and accountant they felt it was worth the slightly higher interest rate to be able to buy the home now. I will say I love straightforward simple applications but in reality those are few and far between. Most of the applications I work on these days seem to have some sort of plot twist like this one so I am very grateful there are so many options available to help clients who may fall a little outside of the standard lending guidelines.

Marital Breakdown

By Tracy Head • October 18, 2025
One topic I haven’t tackled for a long time is marital breakdowns. When you are working your way through what is arguably one of the most difficult times of your adult life it’s important to know that you have options. There is a program available for refinancing your home specifically for spousal buyouts. Under this program we can refinance your home back up to 95 per cent of the value of the home and use the new funds to pay out your ex-partner and pay out marital debts (provided this is written into your separation agreement). Qualifying this to say that we can refinance to 95 per cent if the value of your home is under $500,000. If the value of your home is over $500,000 we need to ensure you have 5 per cent of the first $500,000 and 10 per cent of any value over the $500,000 left as equity in your home. It’s a small distinction but in the Okanagan the second calculation is the one I see the most. With recent changes to the First Time Home Buyer’s program we can now extend the amortization out as far as 30 years if needed to make the numbers work. It is important to note that this program is an insured program meaning that a premium is added to your mortgage so its important that you work with someone who is familiar with this program. You will require a finalized separation agreement to refinance to pay out the other party.  If you have significant equity in your home and we can make the numbers work a traditional refinance is also an option. In this case we can only increase your mortgage to 80 per cent of the value of your home but there is no default insurance premium required so this is usually the preferable option. A question to ask yourself is whether it makes sense to refinance your current home or to sell and buy a new home. The list of pros and cons will be different for each person, but one of the most important things to consider is whether or not you can afford the higher mortgage payment on your own to stay put. Also key to consider is whether or not you need the same space or whether downsizing might be another option. Do you have children that you want to keep in the same area and same school? Is your current home in a convenient location for work, school, and social activities? Or are you needing a fresh start somewhere new? If you find yourself in this situation and are considering your options with respect to refinancing your home I encourage you to reach out to a professional that can help you take a good hard look at your situation. Doing a bit of legwork upfront may help relieve at least one part of the mental load as you work your way through a separation or divorce.