Refinance mortgage pros and cons

[rokman]

Hi all,

Lurking around and searching the database for info but the last time anyone talked about refinancing their mortgage was in 2013 it seems. I thought it would be worth starting a new thread.

My case (looking for tips so thank you in advance if you have some!)

Bought our home in 2017 in SW Calgary for $477k. On accelerated bi-weekly payments. Currently owe $350k.

Earning good money as a sole proprietor; subcontracted through a geology outfit. Doesn't mean I'm good with my money; I am not. Terrible actually. Assets include:
- a rust-bucket truck with 440,000 kms.
- RRSP valued at $60k
- TFSA valued at $10k

Debts include:
Income tax: $50k (currently repaying it to the tune of $6150/month; ouch... but hey... terrible with money. Did well in the stock market in 2021 like many others did and tried to repeat it in 2022... now paying the price.)
Credit Cards: $12K
Lines of credit: $60k

And once 2023 taxes are filed, I'll owe $75k for sure. (I can hear some of you screaming "WTF MAN!" and asking yourselves tons of obvious questions for me.)

Anyways: here for advice. I had a meeting with a BDO member last week about this and her advice, starting from the best idea to the worst idea was:

1) ask your mortgage people if they'll refinance your mortgage... let me know their answer and what their rate is.

The mortgage folks said "YES" they will refinance our mortgage so we can use the equity we've built up to pay off all these debts. They'll waive the penalties as we are only 1 yr in on our 5-year fixed term (currently at 4.6%) and they offered a refinanced rate , 5 yr fixed, at 5.8%. Our payments go from $1162/month to $1411 (18% higher)

2) Ask other lenders if they'll approve us for a second mortgage in the 5-7% range

3) Ask my bank for a consolidated loan so I can pay off all the debt and then see what their interest rate would be to pay them back

4) Have BDO do up a consumer proposal - essentially they will reach out to all my creditors with a tailored offer to pay off my debts and then BDO will come at me with something in the realm of a $2300 to $2500/month repayment plan over the next 5 years. (the pros to this are: lowers my current obligations of $6150 / month so I don't feel so suffocated... The $6150 payments stop in November but then again, I'll be slapped with for sure another huge income tax and GST tab for 2023, of which I have been able to save $0 for thus far thx to me being a bad boy with the stock market; paying dearly for it. I don't need the riot act read to me; I need solutions and intel based on the tips from BDO... mainly focusing on solution number 1) - refinancing. I'm concerned because I fear I don't know all the repercussions if I opt for this.

5) Bankruptcy; after she learned of all my details, she said this was absolutely not an option for me. The other options are way more favourable and she emphasized I focus on them starting with the first option first. I was not in such dire straights to be a candidate for this #5 option so she left it completely off the table.

@Dean2 is clearly a savvy fella so I hope he chimes in here but am eager to hear what others with experience have to lend.

FYI: I've stopped putting money into the stock market. Everything is now focused on getting out of this debt.
THANK YOU and for the record: I'm not ashamed; I'm hoping this helps me and I'm hoping it may be able to help others if they're also struggling like me.

I'm married with two kids; my wifes name is on the mortgage but she is not on any of my TFSA or RRSP stuff; she's not on any of my credit card stuff or lines of credit or consolidated loans. Essentially, all the debt is my own doing. I pay all the bills for the house and I pay all the mortgage so she's on board with me refinancing because I'm paying the house off anyways. I get that there's going to be big opinions with this. Let's see how we can navigate.