What Happens If You Can’t Afford Your Mortgage in Vancouver?

What Happens If You Can’t Afford Your Mortgage in Vancouver?

Vancouver is one of the most expensive housing markets in Canada — and in 2025, rising interest rates, record home prices, and high living costs are pushing some homeowners to the edge. If you’re worried you can’t afford your mortgage anymore, you’re not alone — and there are options.

In this guide, we’ll cover what to do if your mortgage payments become unmanageable, including refinancing options, deferrals, selling, and even government support. Whether you’re in a downtown condo or a Burnaby townhouse, here’s what you need to know.

How Did We Get Here? The Vancouver Mortgage Crunch

In 2023–2024, the Bank of Canada raised interest rates to combat inflation. Many variable-rate mortgage holders in Vancouver saw their monthly payments double or triple.

Even fixed-rate mortgage holders are facing renewal shocks in 2025 — with rates around 5.25% to 6.25% compared to sub-2% levels in 2020–21.

If you bought a $900,000 condo in 2021 with 10% down at 1.89%, your monthly mortgage was around $3,300. In 2025, that payment could jump to $4,800+ on renewal.

This reality is causing financial stress across the Lower Mainland, especially for:

  • First-time buyers stretching budgets
  • Homeowners with large HELOCs (home equity lines)
  • Investors with negative cash flow

Signs You’re in Mortgage Trouble

Not sure if you’re at the breaking point? Here are common red flags:

  • Missing or delaying mortgage payments
  • Using credit cards or lines of credit to cover basics
  • Can’t afford property taxes, strata fees, or repairs
  • Bank sent a pre-foreclosure notice or demand letter
  • Stress test renewal projections are unaffordable

If any of this sounds familiar, don’t panic — but don’t ignore it. Early action gives you more (and better) options.

1. Talk to Your Lender Right Away

Your first move should be to contact your lender or mortgage broker. Contrary to what many believe, banks don’t want to foreclose. They’re often open to restructuring loans to help you stay in your home.

Common lender solutions include:

  • Mortgage deferral (short-term pause on payments)
  • Switching to interest-only payments
  • Lengthening your amortization (e.g., from 25 to 30+ years)
  • Blending and extending your current mortgage rate

➡️ Pro tip: Some lenders allow amortizations beyond 30 years for distressed borrowers — even if it’s not widely advertised.

2. Consider Refinancing or Re-Amortizing

If you still have decent equity and income, refinancing your mortgage might lower your payments by spreading the loan out over a longer term or securing a better rate.

This works best if:

  • Your credit score is still solid
  • Your income hasn’t dropped significantly
  • You have 20%+ equity in the home

💡 Watch out for penalties: Breaking a fixed-rate mortgage before the term ends may come with steep penalties (especially from big banks).

3. Use Your Home Equity Strategically

Vancouver homeowners typically have strong equity gains, especially if you bought before 2020. You may be able to access this equity through:

  • Home Equity Line of Credit (HELOC)
  • Reverse mortgage (for seniors 55+)
  • Second mortgage or private loan

These options can help bridge short-term cash flow gaps but come with higher interest rates and risk of compounding debt. Speak to a mortgage advisor before making a move.

4. Sell Before It Becomes a Crisis

If keeping your home isn’t feasible long-term, selling on your own terms is often better than waiting for foreclosure. You’ll preserve your credit, avoid legal fees, and potentially walk away with cash.

Reasons to sell:

  • You’re facing negative cash flow monthly
  • Your income isn’t likely to recover soon
  • You want to avoid default, foreclosure, or power of sale

Work with a local Vancouver real estate agent who understands fast sales without fire-sale pricing — and can help you find alternative housing or rental options.

5. Know Your Legal Rights (and Risks)

If your lender starts legal action, they may pursue a foreclosure or power of sale, depending on the province. In BC, foreclosure is more common, and it involves court proceedings that can take 6–12 months.

You’ll receive a:

  • Demand letter from your lender
  • Petition for foreclosure
  • Court hearing to approve a sale or order of conduct

During this time, you can still negotiate a sale or redemption — but the process gets more expensive and stressful the longer you wait.

Helpful resource: People’s Law School BC – Foreclosure Guide

6. Explore Government and Non-Profit Support

There are a few helpful programs Vancouver homeowners can look into:

  • BC Home Owner Grant – Reduces property taxes for eligible homeowners
  • Property tax deferment program (for seniors or families with children)
  • Credit counselling from non-profits like Credit Counselling Society
  • CMHC payment deferral support (if you have an insured mortgage)

Some Vancouver homeowners have also qualified for rental income supplements or room-share arrangements (like renting out a basement suite) to cover mortgage gaps.

What If You’re a Real Estate Investor?

If you own a rental or investment property and the mortgage no longer cash flows, your options depend on:

  • Current market rents
  • Vacancy taxes (Empty Homes Tax, SVT, UHT)
  • Your personal income and debt load

Some investors are choosing to:

  • Sell off low-performing units
  • Convert to long-term furnished rentals
  • Reassign or walk away from pre-sale deals (risking deposit loss)

Final Thoughts: Don’t Wait to Act

If you feel like you can’t afford your mortgage in Vancouver, you’re not a failure — the system is under pressure, and thousands of others are in the same boat.

The worst thing you can do is nothing. The sooner you reach out for help — to your lender, a mortgage broker, a realtor, or even a legal aid clinic — the more control you have.

Resources & Help

Jay

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