Quick answer: Being current on your mortgage does not always mean your household finances are stable. If credit-card balances are rising, minimum payments are consuming more of your income or you are using new debt for essentials, the mortgage may be protected only temporarily. Ontario homeowners often have more options when they seek advice before a mortgage payment is missed or legal action begins.

Key takeaways

• Unsecured payment trouble can be an early warning that mortgage affordability is weakening.
• Paying only credit-card minimums can keep an account current while the balance and interest burden remain high.
• Using home equity to consolidate debt may lower the interest rate, but it can also convert unsecured debt into debt secured against your home.
• A consumer proposal can address many unsecured debts while you continue paying a mortgage, provided the mortgage remains affordable and the lender is paid as agreed.
• The best time to review options is before missed mortgage payments, a renewal deadline or creditor legal action limits your choices.

“My mortgage is paid, so am I really in trouble?”

Many Ontario homeowners make the mortgage their first priority. That instinct is understandable. Housing is essential, and a mortgage lender has security over the property. As a result, a household may continue making every mortgage payment while falling behind on credit cards, lines of credit, taxes or utility bills.

This can create a false sense of stability. The mortgage is current, but the rest of the budget may be absorbing more interest every month. If the gap is being covered with new credit, cash advances or delayed bills, the household has not solved the shortfall. It has shifted the pressure.

The warning deserves attention because non-mortgage arrears can appear before mortgage arrears. The Canada Mortgage and Housing Corporation's Spring 2026 mortgage report noted that delinquencies on other credit products can be an early sign of mortgage stress. The report also showed that mortgages 90 or more days delinquent remained low but were rising, including a year-over-year increase in Ontario from 0.20% to 0.27%.

Seven warning signs to take seriously

1. Your credit-card balances do not fall

You make the minimum payment every month, yet the balance is unchanged or higher. This usually means interest and new purchases are absorbing most or all of the payment. Our article on credit-card balances that are not decreasing explains why a current account can still signal a deeper affordability problem.

2. You use credit for groceries, utilities or property tax

Occasional credit-card use is not necessarily a concern. Repeatedly borrowing for ordinary expenses because income is already committed to debt payments is different. It suggests the monthly budget is structurally negative.

3. You borrow from one account to pay another

Balance transfers and promotional rates can be useful if they are part of a defined repayment plan. They become a warning sign when one line of credit pays a credit card, the card is used again and total debt keeps increasing.

4. Your mortgage renewal is approaching

A payment that is manageable at the current rate may become harder to carry at renewal. The Bank of Canada held its policy rate at 2.25% on September 2, 2026, while noting that financial conditions had tightened and longer-term bond yields had risen. Mortgage pricing depends on more than the policy rate, so a renewal offer may still differ materially from your existing rate. See the Bank of Canada decision and our guide to mortgage-renewal stress.

5. You are considering a second mortgage for unsecured debt

Consolidation can reduce the monthly interest cost, but it changes the risk. Credit-card debt is generally unsecured. A second mortgage or home-equity loan is secured against the property. If the new payment later becomes unaffordable, the home may be exposed.

6. A creditor has started legal action

A statement of claim, judgment, garnishment warning or notice from the Canada Revenue Agency should not be ignored. Legal remedies can affect wages and bank accounts. In some cases, a creditor with a judgment may pursue enforcement against property, subject to Ontario law and the facts. Read more about creditor action and sheriff's sales in Ontario.

7. You are postponing home maintenance or essential insurance

When every available dollar goes to minimum debt payments, homeowners may defer repairs, condominium fees, insurance or property tax. Those costs do not disappear. They can create new risks and make a future sale or refinancing more difficult.

A quick financial stress test

Ask yourself the following questions using actual numbers from the last three months:

• After mortgage, property tax, utilities, food, transportation and insurance, is there enough cash to make more than minimum unsecured-debt payments?
• Is total unsecured debt lower than it was six months ago?
• Would the budget still work if the mortgage payment rose by 10%?
• Could the household absorb a $1,000 emergency without borrowing?
• Have any lenders reduced limits, increased rates or declined new credit?
• Are you relying on overtime, bonuses or family support to cover normal monthly costs?

Several “no” answers do not automatically mean insolvency. They do indicate that the current approach may not be sustainable.

Why minimum payments can hide the problem

Minimum payments are designed to keep an account from becoming delinquent, not necessarily to eliminate the balance quickly. When interest rates are high and new purchases continue, the principal may fall very slowly.

Suppose a homeowner pays $900 each month across several cards but incurs $650 of interest and $400 of new essential purchases. The accounts receive $900, yet total debt rises by $150 before any fees. The person is paying faithfully and still moving backward.

That is why the useful measure is not simply “Did I make the payment?” It is “Is the total balance consistently decreasing without new borrowing?”

Should you use home equity to consolidate credit-card debt?

Home equity can create options, but equity is not the same as available cash. A new secured loan depends on property value, existing mortgages, income, creditworthiness, lender rules and closing costs.

Consolidation may be reasonable when:

• the new interest rate is materially lower;
• the payment fits the budget without relying on new credit;
• the repayment period does not extend the debt unnecessarily;
• credit-card use will stop or be tightly controlled; and
• the homeowner understands the added security against the property.

It may be dangerous when the household has an ongoing income shortfall, the new loan leaves no emergency capacity or the plan requires repeated refinancing. A lower monthly payment can result from spreading debt over many more years, which may increase the total cost.

Before converting unsecured debt into secured debt, compare it with options that do not place additional security on the home.

Can a consumer proposal help while you keep your home?

Potentially. A consumer proposal can include many unsecured debts, such as credit cards, unsecured lines of credit, payday loans, tax debt and shortfalls from surrendered secured assets. It does not rewrite a mortgage. If you want to keep the home, you generally continue paying the mortgage, property tax, condominium fees, insurance and other ongoing home costs.

Filing a proposal does not automatically require a homeowner to sell. The proposal must, however, offer creditors a result they are prepared to accept, and home equity is relevant to that analysis. The mortgage also has to be affordable within the post-proposal budget.

We explain these issues in our article: Consumer Proposal and Your Mortgage. A Licensed Insolvency Trustee (“LIT”) can estimate home equity, review secured debts and compare the likely proposal payment with other options.

What about bankruptcy?

Bankruptcy can eliminate many unsecured debts, but home ownership requires careful analysis. The trustee must consider the property's realizable equity, any applicable exemption, the mortgage balance, sale costs and other registered interests. A homeowner may sometimes keep the property by addressing non-exempt equity and maintaining secured payments, but that outcome cannot be assumed.

Bankruptcy payments and duration can also depend on household income and prior insolvency history. A detailed comparison should be completed before any filing. See our consumer proposal versus bankruptcy guide.

Steps to take before missing the mortgage

Build a 90-day cash-flow forecast

List net household income and every required expense. Include annual costs such as property tax, insurance and maintenance by converting them to monthly amounts. Add the expected mortgage payment if renewal is near.

Stop using available credit as proof of affordability

An unused limit may provide temporary access to funds, but it is not income. Measure whether the household can cover expenses and reduce debt using cash flow alone.

Gather mortgage and property information

Obtain the mortgage statement, renewal date, interest rate, payment frequency, property-tax status and details of any secured lines or liens. Use a realistic property value, not the highest neighbourhood listing.

Review all options before refinancing

Compare the new secured loan's rate, fees, amortization and total interest with a proposal, informal repayment plan or sale. Avoid signing under deadline pressure without understanding the full cost.

Get advice before legal action advances

Formal insolvency filings can create a stay of proceedings against many unsecured collection actions, subject to exceptions. Timing matters. Once wages are garnished, a bank account is frozen or a property process advances, the practical situation can become more complicated.

When selling the home may deserve consideration

Keeping a home is not always the least expensive or safest outcome. A voluntary sale may be worth considering if the mortgage, taxes, utilities, insurance and maintenance consume too much of reliable income, even after unsecured debt is addressed.

The analysis should consider net sale proceeds after mortgages, commissions, legal costs and moving expenses, as well as the realistic cost of replacement housing. The goal is not to preserve ownership at any cost. It is to create a sustainable household budget.

Summary

Staying current on a mortgage is important, but it does not erase warning signs elsewhere. Rising credit-card balances, repeated borrowing for essentials and an approaching renewal can show that housing affordability is becoming fragile.

Ontario homeowners often have more control when they review the full picture early. If unsecured debt is threatening your ability to keep up with the home, contact Litvack Group for a confidential assessment of your options.

Frequently asked questions

Can I file a consumer proposal and keep paying my mortgage?

Often, yes. A proposal deals primarily with unsecured debts. You must continue the mortgage and other ongoing housing costs if you want to keep the home, and the proposal must account for any realizable equity.

Will my mortgage lender be included in the consumer proposal?

The mortgage lender is a secured creditor to the extent of its valid security. A proposal generally does not change the mortgage contract when you retain the property and continue paying. Any unsecured shortfall may be treated differently.

Does a consumer proposal stop foreclosure or power of sale?

Do not assume it will. Secured creditors generally retain rights against their collateral. If mortgage enforcement has started, obtain insolvency and legal advice immediately.

Should I pay credit cards or the mortgage first?

The mortgage protects essential housing and is secured against the home, but every situation is different. Before stopping any payment, review the legal and practical consequences with a qualified professional.

Can I renew my mortgage during a consumer proposal?

It may be possible, but approval, rate and terms are lender-specific. Speak with the lender or a properly licensed mortgage professional well before renewal, and make sure any new payment remains affordable.

Is using a home-equity loan always cheaper than a proposal?

No. Compare interest, fees, repayment period, renewal costs and the risk of securing debt against the home. A lower rate may still produce a high total cost if repayment is stretched over many years.

How early should I ask for help?

As soon as balances stop falling, essentials are being charged to credit or a mortgage renewal appears unaffordable. You do not need to wait for a missed mortgage payment.

About the author

Bryan Litvack, Licensed Insolvency Trustee, CPA, CA, CIRP. Bryan is a Licensed Insolvency Trustee with Litvack Group, helping individuals and families across Ontario understand consumer proposals, bankruptcy and other debt-relief options under the Bankruptcy and Insolvency Act.

Last reviewed: September 2026

Disclaimer:

This article is for general informational purposes only and is not legal or financial advice. Insolvency outcomes depend on individual facts and applicable law. Speak with a Licensed Insolvency Trustee and, where appropriate, a qualified legal professional about your situation.