Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, has identified mortgage risk as the number one threat to the financial system, with defaults expected to rise over the next two years.
With higher interest rates, a large number of upcoming renewals, and increasing financial pressure on households, many homeowners may soon face difficult decisions.
If you or someone you know is concerned about keeping up with mortgage payments, here are three practical things to understand.
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Do not ignore the problem — early action creates options
If mortgage payments become difficult, the most important step is to act early.
Lenders are often more willing to work with borrowers before a default escalates.
Possible options may include:
• requesting a temporary deferral
• extending the amortization period
• restructuring payment terms
However, these options are not guaranteed and typically require communication and cooperation with the lender.
Waiting too long can limit flexibility and increase the risk of enforcement proceedings.
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Understand the realistic options — and their limits
If maintaining payments is not feasible, there are still practical paths to consider:
• selling the property before enforcement action begins
• refinancing or adding a co-borrower, if qualification is possible
• obtaining short-term private financing to stabilize the situation
Each option comes with risks, costs, and timing considerations.
For example, private mortgages can provide breathing room — but often at significantly higher interest rates and with additional fees.
In many cases, an early, controlled sale will preserve more equity than a forced sale under power of sale proceedings.
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Mortgage debt does not disappear — even after the property is sold
A critical point that is often misunderstood:
In Canada, mortgage default does not automatically eliminate the borrower’s debt.
If a property is sold under power of sale and the proceeds are insufficient to cover the mortgage, the borrower may still be responsible for the shortfall.
This is very different from some U.S. jurisdictions, where lenders may be limited to recovering only the property.
In Ontario, lenders can pursue a deficiency judgment for any remaining balance.
This makes early planning and informed decision-making especially important.
Dig deeper
Office of the Superintendent of Financial Institutions — Annual Risk Outlook
https://www.osfi-bsif.gc.ca
Government of Canada — Managing debt and borrowing
https://www.canada.ca/en/services/finance/debt.html
Bottom line
Rising mortgage pressure is not just a headline — it is a developing reality for many homeowners.
The earlier the issue is addressed, the more options are available.
Once enforcement begins, those options narrow quickly.
If you are facing potential mortgage difficulty, understanding your position early can make a significant difference in the outcome.
As always, we are happy to assist with real estate matters involving refinancing, sales, title, and lender-related issues.