Insolvency at its highest since 2009 — a mortgage expert on four key considerations for homeowners
Canadian homeowners feeling the squeeze are increasingly asking whether debt consolidation through their mortgage can ease the pressure.
With insolvency volumes at their highest level since 2009, according to Equifax Canada, the conversation has moved well beyond financial planning offices and into everyday broker meetings across the country.
But while the strategy has real merit in the right circumstances, it demands a clear-eyed look at long-term costs, not just monthly relief.
Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert, says she is seeing a growing number of homeowners raising the idea, often after watching credit card balances climb and monthly obligations stretch to uncomfortable limits.
"Rolling debt into a mortgage can make monthly payments easier to manage, but it's important to think beyond the monthly savings," Zlatkin said.
"Without a plan to pay down the consolidated debt, homeowners could end up paying more in interest over time."
Four questions homeowners should ask
Zlatkin outlines four considerations before any consolidation decision is made.
The first is interest rate comparison. Moving a credit card balance from 19% to a mortgage rate of approximately 4% can meaningfully reduce monthly costs.
Even so, if that balance is stretched across the remaining amortization period of a mortgage, the total interest paid over time can exceed what an accelerated repayment of the original debt would have cost.
The second is choosing the right debts. Credit card balances, which can carry rates between 10% and 21% or more, are typically the strongest candidates. Car loans or leases, especially those tied to tax-deductible business expenses, are generally not a good fit.
Lauren van den Berg, President and CEO of Mortgage Professionals Canada, says borrowers are increasingly seeking expert advice, lender access, and personalized support, with broker market share rising to 38% in 2026.https://t.co/waGqZwdnHH
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 27, 2026
The third is timing and cost. Homeowners who consolidate at renewal avoid prepayment penalties; those who refinance before the term ends may face a prepayment penalty as well as legal, appraisal, and administrative fees.
Zlatkin advises calculating those costs directly against the projected savings before proceeding.
The fourth is avoiding a debt rebound. Without a plan to prevent new balances from building, consolidation simply defers the problem.
The broader picture
The financial context makes the conversation urgent. Ontario and British Columbia are driving Canada's rising insolvency volumes, with Ontario recording a 52% spike in mortgage balance delinquencies in the first quarter of 2026, according to Equifax Canada.
A February 2026 study by Hoyes, Michalos & Associates found that Canadians who reach insolvency now carry record levels of unsecured debt, averaging $67,496, up 11.2% in a single year.
Victor Tran, mortgage and real estate expert with Rates.ca, has observed that borrowers grappling with declining appraisal values and refinancing barriers in the GTA face a separate set of constraints — namely, limited home equity that can restrict how much high-interest debt they are able to consolidate in the first place.
For homeowners who do have sufficient equity and qualify under their lender's stress-test requirements, Zlatkin's framework reinforces a point that brokers are well positioned to deliver: monthly payment relief and long-term financial health are not always the same thing, and the difference between the two often comes down to planning.
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