# What are the key considerations for responsible debt consolidation?

> Responsible debt consolidation requires a thorough assessment of the borrower's ability to manage the increased mortgage amount.

Category: Renewal
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/renewal/what-are-the-key-considerations-for-responsible-debt-consolidation

## Answer
Here's a breakdown of what to evaluate:

| Consideration         | Description                                                                                                          |
|------------------------|----------------------------------------------------------------------------------------------------------------------|
| **Borrower Assessment** | FRFIs must conduct due diligence on the borrower's willingness and capacity to service debt.                         |
| **GDS/TDS Ratios**      | Debt service ratios are fundamental for assessing a borrower's income and ability to handle debt.                       |
| **RMUP Compliance**     | FRFIs must establish debt serviceability metrics in their Residential Mortgage Underwriting Policy (RMUP).               |
| **Qualifying Rate**    | FRFIs should consider current and future conditions when determining qualifying rates.                               |
| **Credit History**     | FRFIs need to investigate the background, credit history, and borrowing behavior of prospective borrowers.             |

## Institutional highlights
- Lenders will carefully review your ability to manage all your debts.
- Your debt-to-income ratio is a key factor in getting approved, showing how much of your income goes to debt payments.
- Lenders have internal guidelines to assess if you can comfortably afford your mortgage and other debts.
- Lenders consider current and potential future interest rate changes when deciding how much you can borrow.
- Lenders will check your credit history to understand your past borrowing habits.

## Related guide
- https://ratellow.com/guides/debt-consolidation-renewal

## Sources
- OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/osfi-exempts-uninsured-mortgage-straight-switches-prescribed-mqr-implements-portfolio-lti-limits
- Debt service coverage — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.3.3
- Disclosure requirements — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#3.1