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Quick answer: If your condo is worth less than you owe, you can’t simply sell and walk away. In Ontario, you must pay the shortfall in cash at closing, and if a lender later sells the unit under power of sale, it can still sue you for any amount left owing. The right choice depends on three numbers: how much cash you would need to sell today, how much you lose each month by holding, and how long you can carry that loss. Work those out before deciding, and talk to your lender early, because being underwater can also limit who will renew your mortgage.
Key takeaways
- Toronto condo prices have fallen for several years in a row, and some forecasts expect further declines in 2026 and 2027.
- If you owe more than 80% of the unit’s value on a regular mortgage, other lenders may refuse to take you at renewal. Plan for negotiating with your current lender.
- A loss on a rental condo can usually reduce taxes on other capital gains. A loss on your own home cannot.
Step 1: Work out your real position
| Number | Where to find it | Example |
|---|---|---|
| Realistic sale price | Recent sales of similar units in your building (ask me for a free report) | $560,000 |
| Selling costs | Commission, legal fees, any mortgage penalty | $32,000 |
| Mortgage balance | Your latest statement | $620,000 |
| Cash needed to sell | Balance + costs − price | $92,000 |
If that last number is zero or less, you can sell without bringing cash. If it is large, keep reading.
Step 2: Compare your three options
| Option | Upfront cash | Monthly cost | Main risk |
|---|---|---|---|
| Sell now | The shortfall (example: $92,000) | None after closing | Locking in the loss |
| Rent it out | Small (leasing fee, any repairs) | Mortgage + fees + tax + insurance − rent | Vacancy, bad tenant, prices fall further |
| Hold and live in it | None | Your full carrying costs | Renewal at a higher rate |
Worked example (rent it out):
| Monthly | Amount |
|---|---|
| Mortgage payment | $3,050 |
| Condo fees | $620 |
| Property tax | $230 |
| Insurance and repairs allowance | $120 |
| Total cost | $4,020 |
| Rent you can realistically get | $2,500 |
| Monthly loss before tax | $1,520 |
Over three years, that is about $55,000 out of pocket, plus whatever happens to the price. Compare that with the $92,000 to sell now. If prices recover even modestly over three years, holding may win. If they keep falling, selling sooner may cost less.
The honest test: could you carry the monthly loss for three years even if you lost your job for six months? If not, holding is riskier than it looks.
Want your real numbers, not guesses?
I will pull recent sales and rents in your building and help you compare all three options.
Or call/text (647) 709-2814 · Confidential, no pressure
The renewal trap most owners don’t see coming
At renewal, a new lender will usually only take a regular mortgage up to 80% of the property’s value. If your unit is underwater, you are well above that, so switching lenders is usually not possible. Your current lender knows this.
What to do:
- Start talking to your lender four to six months before renewal.
- Ask for their best rate in writing, not the posted rate.
- Ask about extending the amortization to lower the payment.
- If you are struggling, ask about hardship options before you miss a payment.
Tax basics (check with an accountant)
| Situation | What you can usually deduct |
|---|---|
| Rented condo | Mortgage interest, condo fees, property tax, insurance, repairs, against the rent. A rental loss can reduce your other income. |
| Selling a rental at a loss | Half of the capital loss can offset capital gains (in the same year, three years back or any future year). |
| Selling your own home at a loss | No deduction. |
Options if you truly can’t carry it
- Sell and borrow the shortfall. Some lenders will convert the shortfall into an unsecured loan so you can close. It is not common, but it is worth asking.
- Find a buyer through an assignment-style deal (for units that have not closed yet; see our guide on pre-construction appraisal gaps).
- Sell before you fall behind. A normal sale almost always brings a better price than a power of sale, and it protects your credit.
Mistakes to avoid
- Waiting until you have missed payments. Your options shrink fast.
- Pricing above recent sales “to see what happens.” Stale listings sell for less.
- Renting without a proper lease and screening. A bad tenant can turn a manageable loss into a disaster.
- Ignoring condo fee increases and special assessments when you do the math.
FAQ
Can I just hand the keys to the bank?
No. Ontario lenders can sue for any shortfall after a power of sale, and it damages your credit badly.
Will renting it out cover my costs?
In many Toronto buildings today, rent covers only part of the costs. Run the numbers with realistic rent, not last year’s.
Should I wait for prices to recover?
Only if you can comfortably carry the monthly loss for several years. Nobody can promise when prices will recover.
Get a free, honest condo valuation.
Know what your unit would actually sell for today, before you decide anything.
Or call/text (647) 709-2814 · Gursimran (Guru) Tamber, Sales Representative, CENTURY 21 People’s Choice Realty Inc., Brokerage
Keep reading
General information only, not legal, tax or financial advice. Figures are examples. Speak with your lender, a lawyer and an accountant about your situation.
Sources: CTV: Is your Toronto condo worth less than your mortgage? · MPA: Toronto condo market 2026
ABOUT THE AUTHOR
Gursimran (Guru) Tamber, Sales Representative
CENTURY 21 People’s Choice Realty Inc., Brokerage · RECO registration #5027219 · CENTURY 21 Pacesetter Gold (2024) and Masters Silver (2023) award winner
Guru helps buyers, sellers and investors across the GTA, Hamilton and Waterloo. Before real estate, he spent close to two decades leading IT transformation projects for Fortune 500 brands across Asia, Europe and North America. He speaks English, Hindi and Punjabi.
