4 Paths to a More Affordable Mortgage Payment
Homeowners with variable-rate mortgages are under tremendous financial pressure. That tends to happen when rates increase more than 170% in less than five years (from a low of 1.5% in early 2022 to 4.2% in late 2025).
But here’s something you may not know: In August 2025 , out of Canada’s more than 5 million residential mortgages, only 11,661 — a microscopic 0.24% — were in arrears, according to analysis by the Canadian Bankers Association.
A mortgage is considered to be "in arrears" when the borrower misses three or more payments.
One reason for that low figure is Canada’s conservative lending guidelines. But another major factor is that when mortgages start becoming unmanageable, homeowners have options to help them survive the strain.
Let’s explore four of these options now, starting with the least risky.
1. Defer your mortgage payments
If you’ve been making your payments on time, your lender may be willing to grant you a mortgage deferral. Under this arrangement, you can pause your mortgage payments for an agreed-upon period of time — often up to several months.
You’ll be expected to resume a regular payment schedule once the deferral period expires. You’ll also have to make up for the payments you missed by either increasing your regular payment amount, adding the deferred payments to the end of your mortgage term or extending the mortgage’s amortization.
A mortgage deferral can offer short-term relief by pausing payments, but it typically comes with a downside: the unpaid interest is usually added to the balance, which can extend the overall time it takes to pay off the loan.
2. Switch to a fixed-rate mortgage
With bond yields dropping and lenders reducing discounts on variable-rate mortgages, 2025 brought periods where some fixed mortgage rates were actually lower than variable rates. If your variable-rate mortgage payments are too high, switching to a fixed rate could provide some payment relief.
It’s one of the simpler solutions on offer, but you’ll have to commit to it for the duration of your current loan term.
If you’re a year or less into a five-year term, for example, you’ll be locked into your new fixed rate for at least four years. If rates decrease before 2029 you may be stuck making payments that will again seem too high.
Locking into a fixed-rate mortgage for a one or two-year term can be a practical option. It lets you lower your payment, gain some financial stability, and still have the chance to benefit from potential rate improvements by the end of the mortgage term.
👀 See what mortgage rates look like today
3. Refinance and re-amortize
Refinancing your mortgage and extending the amortization period is a common way to decrease monthly mortgage payments. If your 25-year mortgage becomes unsustainable, a 30- or 35-year amortization may shrink your payments enough to get you through the rest of the term. Some alternative lenders are even offering 40-year amortizations.
Refinancing can also help free up home equity, which can be used to pay off other debts and free up cash flow. But there are several caveats to consider when refinancing a mortgage mid-term.
You’ll want to try refinancing with your current lender to potentially avoid any prepayment penalties. Some lenders will waive these penalties for their clients, but others may charge three months’ interest for breaking your mortgage early.
Refinancing means re-qualifying. If your payments are too high because your financial situation has deteriorated, refinancing could be a challenge, especially if you want to switch lenders. You’ll also have to pass a mortgage stress test based on today’s elevated interest rates.
If you need a 35- or 40-year amortization, you’ll need at least 20% equity in your home. You may also have to turn to alternative lenders, whose interest rates can be considerably higher than those offered by mainstream lenders.
Re-amortizing means paying years of additional interest, so the goal should be to revert back to a faster payment schedule with higher payments sooner rather than later, ideally at the beginning of your next term.
4. Leverage a secured line of credit
If there’s no other way to make a mortgage payment, one strategy is to access the necessary amount using a secured line of credit like a HELOC. The homeowner continues to pay their mortgage, and the only short-term cost will be a modest interest-only payment on the new debt.
There’s just the little matter of eventually paying down the thousands of dollars that get added to your line of credit. If there’s no clear path to wiping out this debt, it could weigh down your finances — and your credit profile — for years.
It might not be the first option homeowners should turn to, but it can still be preferable choice to selling their home.
Remember: Think long-term
Lenders would rather collect mortgage payments than foreclose on houses. So if you’re worried about missing a mortgage payment, call your lender or mortgage broker immediately and start working on a solution. It won’t be a fun conversation, but you can’t afford to put it off.
Any changes you make to your mortgage should be made with the long-term implications in mind. Reamortizing or accessing other credit can make the next several months more manageable, but how will these short-term fixes impact your future financial goals?
When weighing your options with a mortgage advisor, don’t rule out other creative short-term options to boost your income, like renting out a spare room or parking space, taking on side work, or finding other flexible earning opportunities, to ensure this year’s mortgage solution doesn’t become next year’s financial setback.
Sources
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- Canadian Bankers Association. Mortgage in arrears in Canada - what the numbers mean. Accessed Nov 26, 2025.
- Bank of Canada. Interest rates for new and existing lending by chartered banks. Accessed Nov 26, 2025.
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