Is 2025 the Year to Smooth Out Your Debt? What People in BC Should Know About Consolidation Mortgages
November 25, 2025 | Posted by: Posted by: Dawn Stephanishin & Jenn Wightman - Vernon and Kelowna Mortgage Brokers
If you live in Vernon or Kelowna, you are probably feeling the financial squeeze like many households across British Columbia. Interest rates stayed high for much of 2024, credit card balances climbed, and many people leaned on lines of credit to stay afloat. Now that the Bank of Canada has begun trimming rates again, a lot of BC residents are asking the same thing. Could 2025 finally be the year to get all this debt under control?
One option gaining a lot of interest is a consolidation mortgage. It is a simple concept, roll your high interest debt into your home loan, reduce your monthly payments, and simplify your budget. But how do you know if this strategy makes sense in the Okanagan in 2025, and what should you expect as the market shifts?
Let us walk through everything you should know, in clear everyday language, so you can decide if this is the right move for you and your household.
What is a consolidation mortgage and how does it actually work?
A consolidation mortgage lets you take multiple high interest debts, such as credit cards, lines of credit, personal loans, and even unpaid bills, and roll them into one lower interest mortgage payment. Instead of juggling several due dates and interest rates that often sit between 19 and 29 percent, you shift that balance into your mortgage at a much lower rate.
For many families in Vernon, Kelowna, and surrounding areas like Coldstream, Lake Country, and West Kelowna, it is an attractive option because it frees up monthly cash flow and reduces stress.
This is not the same as a personal consolidation loan, which usually still has higher rates. A consolidation mortgage uses your home equity, which is why the rate is lower and the payment becomes more manageable.
Why are more homeowners in BC looking at consolidation mortgages in 2025?
Household debt in Canada reached high levels in 2024, and BC carries some of the highest average balances in the country. Combine that with the higher cost of groceries, fuel, utilities, and housing, and it is no surprise that people across the Okanagan have been feeling stretched.
Now things are shifting. The Bank of Canada started easing interest rates late in 2024, and many forecasters expect additional gradual reductions in 2025. Lower rates help your mortgage qualify for better terms and make refinancing more accessible.
For many people, this means 2025 might be the year where debt consolidation actually works in their favour. A slightly lower mortgage rate can allow you to fold in your debts without inflating your monthly payment.
Does debt consolidation make sense if I plan to renew my mortgage soon?
If your mortgage renewal is coming up in 2025 or 2026, now is the time to look closely at all your options. A renewal provides a natural opportunity to restructure your mortgage and consolidate outside debt. Many BC homeowners take this moment to compare lenders and secure better terms.
If you want help preparing for your renewal, you can explore more details here:
Vernon Mortgage Broker
Kelowna Mortgage Broker
When clients in the Okanagan come to us with upcoming renewals, we often review their whole financial picture, not just the mortgage itself. This includes any unsecured debt sitting at high interest. Combining everything now can set you up with a cleaner slate and better cash flow.
How much equity do I need to consolidate debt into my mortgage?
In Canada, most lenders will allow homeowners to borrow up to 80 percent of their property value on a refinance. That means you need enough equity to cover your existing mortgage plus the extra debt you wish to consolidate.
With property values in Vernon, Kelowna, and the Okanagan still holding relatively strong, many homeowners have more equity than they realize. Even with the more balanced market seen in 2024, properties in areas like East Hill, Lower Mission, and Glenmore have maintained solid long term appreciation.
If you are unsure how much equity you might have, we can help you estimate it and walk through your possibilities.
What kinds of debt can BC homeowners consolidate?
Almost all unsecured debt can be rolled into a consolidation mortgage, including:
- Credit card balances
- Personal loans
- Lines of credit
- Car loans, in many cases
- CRA arrears
- Collections or overdue bills
Every situation is a bit different, but most families in the Vernon and Kelowna area do consolidate several types of debt all at once, especially when interest rates start moving in their favour.
Could a consolidation mortgage actually save me money?
In many cases, yes. The savings usually come from two places. First, the interest rate on your mortgage is almost always much lower than the rates on credit cards or unsecured loans. Second, having one payment instead of several makes your budget easier to manage, which reduces the risk of late fees and extra charges.
Many people in the Okanagan see their monthly payments drop significantly after combining their debt. Even better, you often end up paying less interest overall because you stop throwing money at high rate accounts.
Is there a downside to using my mortgage to consolidate debt?
There can be, depending on your habits and your long term plan. The biggest concern is taking unsecured debt and spreading it over a longer mortgage term. This can reduce your monthly payment, but you need to stay committed to not building the debt back up again.
We always talk openly with clients about their goals and monthly budget. Consolidation works best when it is paired with a plan to avoid future high interest debt.
This is part of why working with a local mortgage professional matters. Someone who understands the Vernon and Kelowna market, cost of living, and lending landscape can help map out the right approach for you.
How do I know if a consolidation mortgage is the right move for my family?
Here are a few signs that it could be worth exploring:
- Your credit cards are carrying balances month to month
- Your monthly payments across several debts feel unmanageable
- The idea of focusing on one payment instead of several brings relief
- You are facing a mortgage renewal soon
- You have enough home equity and steady income
If any of these sound familiar, it might be time to talk to someone who can break down the numbers for you and show what your new payment could look like.
Can consolidation help if I am planning a home purchase in Vernon or Kelowna?
Yes, in many cases cleaning up outside debt before buying a home can improve your affordability and help your file look stronger with lenders. Lower monthly obligations can sometimes mean you qualify for a better purchase price.
If your next step is a home purchase in the Okanagan, you may find this helpful:
Home Purchase Mortgages in Vernon
We often assist buyers who want clearer finances before they start viewing homes. With property prices varying sharply between neighbourhoods like Middleton Mountain, BX, Rutland, and Dilworth Mountain, every little bit of affordability helps.
Are consolidation mortgages different in BC compared to the rest of Canada?
The basic structure is similar across the country, but the lending environment in BC, especially the interior regions like Vernon and Kelowna, tends to offer more options for homeowners with solid equity. Property values here can provide flexibility that homeowners in other parts of the country might not have.
Local appraisals, local market knowledge, and regional lender programs can make a big difference. This is why working with someone who understands the Okanagan market is so helpful.
Is 2025 a good time for me to talk with a mortgage professional in BC?
If 2025 is the year you want to get your debt under control, a consolidation mortgage might be the simplest step forward. You do not have to juggle everything alone. We are here to explain your options clearly, review your numbers, and give you a plan that fits your life and your goals.
Encourage readers to book a consultation or contact me.
Frequently asked questions about consolidation mortgages in BC
How long does a consolidation mortgage take to set up?
Most files take between one and three weeks depending on the complexity of the debt and the lender you choose. Some files move faster if documents are provided quickly.
Can I consolidate debt if my credit is bruised?
Often yes. Lenders look at the full picture, including your equity and income. Many BC homeowners with bruised credit still qualify for consolidation options.
Do I need an appraisal for a consolidation mortgage?
In most cases, yes. Lenders usually need to confirm your home value before approving a refinance. Appraisals in Vernon and Kelowna are typically straightforward and can be completed quickly.
Will a consolidation mortgage affect my ability to move or upgrade later?
Not usually. As long as the structure of your mortgage works for your budget, you can still plan future moves, upgrades, or purchases. The key is choosing terms that line up with your goals.
What happens if rates drop again after I consolidate my debt?
You may still be able to refinance into a lower rate later if it makes sense for your situation. Many clients review their mortgage again if rates shift in their favour, especially in active markets like Vernon and Kelowna.