Should You Consolidate Student Loans into Your Mortgage?

An interesting question, given how large the student loan debt a lot of kids have once they graduate. The real question is will a bank loan you enough for your house if you have $40,000 in student debt? My guess is they might, and they might even want you to combine all that lovely debt into 1 interest grinding place (with a very long payback period).

Typically a student loan can last up to 115 months (but can be extended or changed depending on  your circumstance) so adding that to your mortgage might seem like a good idea, as your mortgage will be for 25 years, so you have longer to pay all this down, but that is a mistake.

Here are a couple of reasons why I think this is a mistake:

1. Your student loan interest payments get a 15% credit on your taxes, you forego that if you consolidate that into your mortgage. May not seem like much but it can add up, wonder if you could transfer your house onto your student loan (that is sarcasm folks, I am not advising you to do this).
2. You can renegotiate your student loans if there are problems paying it back and have the period extended and other options, once this is lost in your Mortgage you don’t have this opportunity.
3. I have a real “hate on” for “consolidation” of debt into your mortgage. The same reason I don’t like the idea of “expanding” your mortgage initially so you can buy new appliances (and thus you are amortizing your refrigerator over 25 years), adding any other debt to your mortgage make me financially nauseated.

The sad thing about this is that Students are graduating in Canada with a large enough debt load (these days) that they need to consider adding this debt to their mortgage.