When a 5.99% Mortgage Beats a 3.5% Mortgage
A real North Bay refinance — and why blended interest rate, not headline rate, is the number that actually matters.
The Big Idea
Most homeowners compare a single rate to another single rate. In reality you should compare your blended cost of all debt. When you do, a "higher" private mortgage rate often costs less per month than the patchwork of bank debt, credit cards, lines of credit and CRA arrears it replaces.
The Client's Situation
Property
Single-family home in North Bay, ON
Appraised value: $450,000
Existing Debts
- • TD 1st mortgage — $200,000 @ 3.5%
- • Credit cards & lines — $60,000 @ ~16% avg
- • CRA HST / income tax — $20,000
Total owed: $280,000
Run It Through the Interest Rate Comparison Tool
Lining up each debt side-by-side (interest-only, monthly carry) tells the real story:
| Debt | Balance | Rate | Monthly Interest |
|---|---|---|---|
| TD 1st Mortgage | $200,000 | 3.50% | $583 |
| Credit Cards / LOC | $60,000 | 16.00% | $800 |
| CRA HST / Taxes* | $20,000 | ~10.00% | $167 |
| Blended (before) | $280,000 | 6.64% | $1,550 |
| New Private 1st (after) | $300,000 | 5.99% | $1,498 |
*CRA prescribed rate plus arrears interest; illustrative. CRA debt is non-dischargeable and can trigger liens, garnishments and frozen accounts — its true cost is far higher than the headline rate.
The Result
Monthly interest saved
$53
vs. blended 6.64%
Loan-to-Value
66.7%
$300,000 on $450,000
Term & flexibility
2 yr
Open after month 12
Structure of the new loan
- • New private 1st mortgage: $300,000 @ 5.99%
- • Lender & broker fees: 2.75% = $8,250 (capitalized into the loan)
- • Payouts: TD ($200,000) + cards/LOC ($60,000) + CRA ($20,000) = $280,000
- • Net residual after fees & payouts: ~$11,750 (closing costs / cushion)
- • Term: 24 months, open after month 12 — exit penalty-free into a renewed bank product once credit is repaired
Why "5.99%" Was Cheaper Than "3.5%"
The TD rate was the lowest headline rate on the page — but only on $200K of the client's $280K of total debt. The remaining $80K was sitting at 16% (credit) and 10%+ (CRA), dragging the blended cost of borrowing to roughly 6.64%.
Replacing all three with one 5.99% private mortgage:
- Lowered the blended rate by ~0.65 percentage points
- Eliminated the CRA's lien risk and collection actions
- Stopped revolving credit from compounding monthly
- Bought a 12-month runway to repair credit, then a 12-month open window to refinance back to a bank
What does your blended rate look like?
Plug your own debts into the Interest Rate Comparison tool to see whether a refinance actually saves you money — or talk to a licensed broker to map a real exit strategy.
Educational content only.
Numbers are illustrative interest-only calculations based on the inputs shown. Actual rates, fees and approval depend on the lender, property, credit and income. The June Jaga Group — FSRA Brokerage #10874. All financing is subject to lender approval and compliance review.
Frequently Asked Questions
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