Consolidate your line of credit into your mortgage: when it helps and when it backfires

Short answer: You can consolidate a line of credit into your mortgage by refinancing (or adding a home equity line of credit) and using the money to pay off the line and any personal loans. It usually lowers your rate, and it can turn interest-only, variable payments into a fixed payoff plan. FCAC cautions that consolidating may extend your repayment period and cost more in interest over time, and that keeping the same spending habits can lead to more debt ^[1]. The difference between "helps" and "backfires" is what you do with the payment and the old line.

This guide covers lines of credit and personal loans specifically. If credit cards are the main problem, the trade-offs are similar but the rate gap is bigger. To see the options for your situation, start with our debt consolidation mortgage page.

Why a line of credit is different from other debt

FCAC explains that with many lines of credit you only have to pay the interest each month, and you're responsible for paying down the principal yourself ^[1]. Lines of credit normally have variable rates ^[1], so the cost moves with your lender's prime rate. That matters right now: the Bank of Canada raised its policy rate to 2.5% on October 28, 2026, and its next decision is December 9 ^[4]. Lenders' prime rates typically follow the policy rate, so many line-of-credit payments have just gone up.

A personal loan is the opposite: regular payments, a fixed or variable rate and a set payback date ^[1]. That's why rolling a loan into a mortgage needs more care. You may be swapping a debt that ends in a few years for one that runs for decades.

A worked example: $55,000 of line-of-credit and loan debt

Illustration (assumed rates, not offers): a $40,000 unsecured line of credit at an assumed 9.95%, paying interest only, plus a $15,000 personal loan at an assumed 11.5% with four years left. The mortgage rate is an assumed 4.49%.

Calculated in Python with semi-annual compounding on the mortgage and monthly on the line and loan. Excludes refinance costs such as legal, appraisal and any prepayment penalty. Assumes your mortgage allows the extra payments; see our guide to prepayment privileges.

The lower payment is real, and so is the risk. Paying only the 25-year amount costs roughly $26,500 more in interest than keeping your current payment. Keep paying what you paid before, and consolidation saves money and gets you out of debt years sooner.

Want to see your own numbers? A licensed 8Twelve agent can compare consolidating into your mortgage with a HELOC or a smaller loan, across 65+ lenders, OAC. Explore debt consolidation options

When consolidating your line of credit helps

• The line has become permanent. If you've been paying interest only for years, a payoff plan is the main benefit, not just the lower rate.
• Variable-rate debt is squeezing your budget. Moving it into a mortgage lets you choose a fixed or variable term on purpose.
• You have room under 80%. A regular refinance can't go above 80% of your home's value ^[3], so you need enough equity to cover the debt and the costs.
• You're near renewal. Refinancing at maturity avoids a prepayment penalty. Our refinance costs guide lists the fees to expect.

When it backfires

1. You stretch the debt over 25 years. FCAC warns a longer repayment period can cost more in interest ^[1]. In our example, that's about $36,200 versus about $9,700.
2. The old line stays open and fills up again. FCAC notes that continuing to borrow from a line of credit can make getting out of debt difficult ^[1]. In our example, refilling the $40,000 line means about $636 a month in payments and $95,000 of total debt.
3. The penalty is bigger than the saving. Breaking a fixed mortgage mid-term can cost thousands. Compare it with our refinance break-even method before you sign.
4. Unsecured debt becomes secured by your home. If money gets tight later, the debt is now tied to the house.

If your line of credit is already a HELOC

A home equity line of credit is already secured by your home. FCAC notes many HELOCs need interest-only payments and the rate can change ^[2]. In our experience, some combined mortgage-and-HELOC products let you move part of the balance into a fixed-rate, amortizing portion without a full refinance. If that's available, it can give you the payoff plan without the cost of breaking your mortgage. Our HELOC vs refinance guide compares the two routes.

How to consolidate without undoing it

1. List every balance, rate and minimum payment, including any line of credit you plan to keep.
2. Choose your payment first, then the amortization. Aim to pay close to what you pay now.
3. Ask about prepayment privileges so you can pay extra without a penalty.
4. Close the old line or ask the lender to lower its limit once it's paid off.
5. Keep a small emergency fund so the line isn't your safety net.

Credit score and timing

Paying off a line of credit lowers how much of your available credit you're using, which can help your score over time. A refinance also involves a credit check. Our guide to how debt consolidation affects your credit score covers the short dip and the rebound.

From our desk: the consolidations that work best are the ones where the borrower decides the monthly payment before the lender quotes an amortization, and closes the old line the day it's paid off.

Consolidating your line of credit into your mortgage works when it turns open-ended, variable debt into a plan you'll actually finish. Keep the payment close to what you pay now, shut the door on the old line, and check the penalty before you refinance mid-term.

Run the numbers: compare your payments with our debt consolidation calculator, or read our full guide to debt consolidation mortgages.

This article is for general information only and isn't financial, legal or tax advice. Rates, products and terms change without notice and are available on approved credit (OAC). The rate and terms you qualify for depend on your individual financial situation, including credit, income, property and loan-to-value. "Best rates" means the most suitable options available for your situation, not a guarantee of the lowest rate. Example rates and payments are for illustration only, as of October 2026, and are not an offer. 8Twelve Mortgage arranges mortgages through 65+ lenders and does not lend directly. Licensed across Canada — see our licences.

Consolidating unsecured debt into your mortgage may lower your monthly payment but can increase the total interest paid over the amortization period. Example rates and payments are assumptions for illustration only, as of October 30, 2026, are not offers and exclude refinance costs. Rules checked against FCAC and the Bank of Canada on October 30, 2026. 8Twelve does not lend or fund mortgages, HELOCs or second mortgages; we arrange them with third-party lenders, OAC.