HELOC vs. Refinance: What’s Better for Consolidating Debt in 2025?
by Jasmine Srnicek, The Cash Flow Broker – London, Ontario
Introduction
If you're a homeowner juggling credit cards, car loans, or student debt, you're not alone. Canadians are holding more personal debt than ever-and with interest rates climbing, monthly payments are taking a serious toll on cash flow.
Two of the most powerful tools to regain control are:
- A HELOC (Home Equity Line of Credit)
- A Mortgage Refinance
But which one makes more sense for your situation? Let's break it down clearly-no fluff, no confusion-just the facts (and a little heart, because we're real people dealing with real money stress).
First, What’s the Goal?
Before we compare tools, ask yourself:
👉 "What am I trying to accomplish?"
Most of my clients in London, Ontario say some version of:
- "I need to simplify my debt."
- "I want to free up cash flow."
- "I'm tired of just keeping up."
HELOC vs. Refinance – Side-by-Side
FeatureHELOCRefinance
Interest RateVariable (usually Prime + 0.5%-1.5%)Fixed or Variable, often lower
Access to FundsAs-needed, like a credit cardLump sum at closing
Repayment TypeInterest-only or moreStandard mortgage payments
FlexibilityHighModerate
Debt ConsolidationGood for small/moderate amountsBest for larger balances
Monthly PaymentFlexible (but can rise)Predictable, structured
Credit ImpactDependent on usageFully integrated into mortgage
When a HELOC Might Be the Right Fit
A Home Equity Line of Credit (HELOC) can be a great option if:
- You only need to borrow a small amount
- You want flexibility in how and when you repay it
- You're not ready to reset your mortgage just yet
Client Story: Flexible Access Without Touching the Mortgage
Rob is a self-employed contractor who owns a home in St. Thomas. He had about $8,000 in credit card debt and needed another $10,000 to buy tools and materials upfront for a big new contract.
We considered a refinance-but that would've meant reworking his entire mortgage for a relatively small amount of debt. Instead, we went with a HELOC.
Why it worked:
- He got access to $20,000 without resetting his mortgage
- His interest payments were lower than his credit cards
- He only paid interest on what he actually used
- He had strong income and credit, and knew he'd pay it off quickly
For Rob, the HELOC gave him the short-term flexibility he needed, without touching his locked-in mortgage rate.
When a Refinance Is the Smarter Choice
A refinance rolls your debt right into your mortgage and gives you a fresh start:
- One predictable monthly payment
- A lower interest rate than most lines of credit or credit cards
- A clear payoff plan
It works best when:
- You're carrying $20,000+ in high-interest debt
- You want to improve monthly cash flow
- You're feeling overwhelmed trying to manage it all
Bonus: You can refinance into a longer amortization to lower your payments even further. I'll run the numbers for you to see what's possible.
Client Story: From 'Overwhelmed' to 'Organized'
When I met Lisa, she had $38,000 in credit card and line of credit debt, plus a $420,000 mortgage. She was making all the minimum payments-but barely.
She felt stuck.
We reviewed both options. A HELOC would give her flexibility-but refinancing gave her a real solution.
By refinancing:
- We paid out all $38,000 of debt
- Reduced her monthly payments by $620/month
- Locked in a fixed rate below 4%
Now, Lisa has one payment, one plan, and no more juggling. She told me she finally feels like she can breathe again.
Quick Summary: Which Is Right for You?
You Might Choose a...If You...
HELOCHave small, short-term borrowing needs and value flexibility
RefinanceWant to eliminate large debt and improve cash flow long-term
Not Sure? Let’s Chat It Through.
There's no one-size-fits-all answer here-but there is a right fit for you. I'll help you walk through both options, run real numbers, and give you a plan that makes sense.
📞 Book a Free Call: https://jasmortgages.ca
📩 jasmine@jasmortgages.ca
🏡 Serving London, Ontario and families across Canada
