Debt Consolidation Calculator

What the Debt Consolidation Calculator does

It rolls your credit cards, line of credit and instalment loans into your mortgage and shows what actually changes: your blended rate, your monthly payment, and the cash freed every month. It also checks the 80% loan-to-value ceiling that limits how much debt can go in, and says which debts to clear first when not everything fits.

What it refuses to do is show you the lower payment on its own. Spreading high-rate debt over a 25-year amortization always lowers the monthly figure, and it can cost more in total. Three options are costed on the same basis so you can see the trade-off rather than take the pitch on trust — including the one that gets you the lower rate without the longer amortization.

• Cash freed each month, counting only the debts that actually get consolidated
• Your blended consumer-debt rate against the single mortgage rate replacing it
• What fits under the 80% ceiling, and which debts to prioritise if it does not all fit
• Three options costed the same way: change nothing, pay the minimum, or keep your old payment
• Which of your debts never gets paid off at its current minimum — usually the strongest argument for acting

Why "doing nothing" is rarely free

An unsecured line of credit typically requires interest only. Pay exactly that and the balance never moves. On $25,000 at 9.95% that is about $207 a month, forever — roughly $62,000 of interest over twenty-five years, at the end of which you still owe the original $25,000.

This matters because a comparison has to handle it honestly. Solving for a payoff date on such a debt returns infinity, and the tempting shortcut is to leave it out of the total. Do that and staying put looks free, which flatters inaction and understates the case for consolidating. Every figure here is simulated over a common horizon instead, so a debt that never clears contributes its very real interest rather than disappearing.

Credit card minimums have a milder version of the same problem. At the 3% convention lenders use, a card at 19.99% does slowly clear; at 29.99% it barely moves. The page tells you which of your debts is in which category.

• An interest-only line of credit never reduces its balance, however long you pay
• A comparison that omits such a debt makes doing nothing look costless
• Every option here is measured over the same horizon, by simulation
• The page flags any debt whose minimum payment never clears it
• Cost means the cash you part with plus whatever you still owe at the end

The trade-off nobody puts in the brochure

Consolidation lowers your payment for one reason: the debt is being repaid over twenty-five years instead of two or five. That is the mechanism, and it is also the catch. The lower rate genuinely helps; the longer amortization works against you, and on some numbers it wins.

The resolution is not to avoid consolidating. It is to consolidate and then keep paying what you were already paying. Your old debt payments were affordable — you were making them — so directing that same amount at the new mortgage clears the consolidated portion in a fraction of the amortization, at a fraction of the interest. You get the lower rate without the longer term.

That is the third option on this page, and it is almost always the cheapest of the three. The gap between it and simply paying the new minimum is usually tens of thousands of dollars.

• The lower payment comes from the longer amortization, not only the lower rate
• Paying the new minimum can cost more in total than clearing the debts as they stand
• Keeping your old payment against the new mortgage recovers almost all of that
• The freed cash flow is a choice: budget relief now, or a much faster payoff
• Decide which one deliberately, because the default is the expensive one

What fits, and what happens to the rest

A lender will refinance a first mortgage up to 80% of the home’s value. Your existing balance, the debt being rolled in and the financed costs all count toward that ceiling. If the total goes past it, only part of the debt can be consolidated.

When that happens the page allocates the available room to the highest-rate debt first, which is where the room does the most good. It also does something a naive calculation gets wrong: the debt left behind still carries a payment, so only the payments on the debt actually cleared count toward the cash freed. Counting all of them would overstate the benefit, sometimes by half.

For the remainder, a second mortgage or a B-lender is the usual route. It costs more than a first mortgage and less than a credit card, which often still makes it worth pricing.

• The ceiling is 80% of value, counting the existing mortgage and financed costs
• Highest-rate debt is consolidated first when the room is limited
• Debt left behind keeps its payment, and that is deducted from the cash freed
• A second mortgage is the usual route for what does not fit
• If the mortgage alone already exceeds the ceiling, a standard refinance is not available

Using your results well

If the cash flow matters to your budget right now, take it. That is a legitimate reason to consolidate and often a necessary one — this page is not an argument against it. But treat the freed amount as something you have chosen to spend, not as a saving that happened automatically.

If your budget can stand it, set the new mortgage payment to what you were already paying in total. That single decision is worth more than any rate you are likely to negotiate, and it is entirely within your control.

And deal with the cause. Consolidation clears revolving balances, which usually helps credit utilisation over time — but a card that fills back up leaves you with the old debt plus a bigger mortgage. That is the failure mode, and it is common enough that any broker worth using will raise it.

• Decide deliberately what the freed cash flow is for
• Keep paying your old total payment if you can — it is the cheapest option on the page
• Prioritise the highest-rate debt when the ceiling limits what fits
• Price a second mortgage for the remainder rather than leaving it at card rates
• Have a plan for not refilling the cards, or this repeats with a larger mortgage