The dream of owning a condo in Toronto has become more complicated in 2025. With home values slipping and rental prices following suit, some owners are discovering that their property is now worth less than what they owe on their mortgage. If you’re in this position—or think you might be soon—you’re not alone, and there are steps you can take to protect yourself.
What the Numbers Are Telling Us
Recent data from the Toronto Regional Real Estate Board (TRREB) reports that condominium prices in Toronto have dropped 7.3% year-over-year, bringing the average condo price to around $710,724. For investors or homeowners who purchased near the market’s peak, this dip may mean their mortgage balance is now higher than the property’s current market value.
And it’s not just property values creating financial pressure. A report from Rentals.ca and Urbanation shows that rents in Toronto have dropped to a 32-month low, averaging $2,589. Owners relying on rental income to cover their mortgage payments may now be facing reduced cash flow or even monthly losses.
Selling May Not Solve the Problem
When property values fall, many owners consider selling to cut their losses. But selling a property for less than what you owe on your mortgage doesn’t make the debt go away. In fact, it can make things worse.
Let’s say your condo is now worth $200,000 less than your outstanding mortgage. Selling would mean you still owe that $200,000 difference to the bank. Most lenders won’t allow you to sell unless the full balance is paid at closing.
In severe cases, this kind of shortfall can lead to personal bankruptcy. That’s why it’s critical to carefully assess your financial situation before rushing to sell.
Facing the Issue Head-On
The first step is to take an honest look at your financial position. Consider these questions:
- When does your mortgage renew?
Renewal time is critical. You’ll likely face higher interest rates, which could increase your monthly payments. - What is your condo worth today?
Check comparable sales in your building or neighbourhood to understand your current market position. - What are your monthly carrying costs?
Include mortgage payments, condo fees, property taxes, and any rental shortfalls if you’re renting out the unit.
Once you have a clear picture, you can begin exploring your options.
Talk to Your Lender—And a Mortgage Broker
If you’re struggling with your payments or worried about renewal, don’t wait. Many lenders are open to discussing short-term solutions, such as:
- Payment deferrals
- Extended amortization periods
- Interest-only payment options
However, speaking to your lender directly might not reveal all your options. This is where working with a licensed mortgage broker, like The Local Broker, can make a difference.
Mortgage brokers have access to multiple lenders, including those who specialize in refinancing or restructuring mortgages for people facing financial challenges. They can help you:
- Review your current mortgage terms
- Explore refinancing to extend your amortization and lower payments
- Assess if switching lenders could improve your situation
- Understand if consolidating debt through a mortgage refinance makes sense
If your mortgage is coming up for renewal, this is especially important. Brokers can help you compare rates and terms across multiple lenders, giving you more control during a stressful time.
This Isn’t Just a Toronto Problem
While Toronto is grabbing headlines, other cities in Ontario and across Canada are facing similar market pressures. Rising interest rates, softening rental markets, and falling property values are combining to create challenges for condominium owners nationwide.
If you own a condo in Vancouver, Ottawa, Calgary, or Montreal, you may be facing similar concerns. The advice remains the same—assess your situation early and get expert guidance.
Don’t Wait for the Market to Fix Itself
It’s tempting to believe that the market will recover quickly, but experts warn that hoping for a bounce-back isn’t a financial plan. Acting early allows you to explore more options and avoid last-minute, high-pressure decisions.
If you think you might be underwater on your mortgage, or if you’re worried about upcoming payments, now is the time to speak to a professional.
Contact The Local Broker today to schedule a conversation about your mortgage or refinancing options. We’re here to help you navigate the uncertainty with expert advice and local market knowledge.
