Strategy For Downsizing

Tracy Head • March 7, 2024

One of the things that I love about my work is that I am able to connect with all types of homebuyers.



I am able to support first-time homebuyers as they make the leap into the housing market, clients looking to upsize from their first homes, clients who are wanting to refinance for renovations or to consolidate consumer debt, and more established clients who are looking to downsize.


Lately it feels that clients who are wanting to downsize are having a tough time.


They want to be able to confidently write a subject-free offer on their next home but are concerned about listing their current home for sale in the event it doesn’t sell in time.


They don’t want to list their current home for sale and potentially find themselves without a suitable  property to buy.

What is the answer?


If the current home is mortgage-free, there are several mortgage options available. There are also private lenders that will register a mortgage over both the current home and the home being purchased (provided the numbers work).


Provided the current home is mortgage-free we can look at registering a credit line against that home in preparation for finding the next home to buy. When the clients find their next home we can use a combination of the funds from that credit line plus a mortgage on the new property to move forward with the next home.

This strategy is not for everyone.


In the Okanagan, people who are making this move may be downsizing, but downsizing to what in terms of purchase price? Often the next home is still priced near or over $1,000,000. To carry financing on a purchase at that price can cost upwards of $7,000.00 per month plus significant fees if using a private mortgage option.


One creative option clients used recently was listing and selling their current home knowing that they were prepared to wait for the right home to pop up. As they neared their sale date they had not found their next home yet, so they rented a storage container and packed everything up temporarily.


They were fortunate that they were able to stay with family for several months until the right home popped up. This put them in a brilliant position to buy with no financing subject in their offer.


Another option that clients have used recently was truly downsizing in both price and space. Their home in Kelowna was appraised at $1,750,000. Based on their financial picture we were able to secure a credit line for $800,000.


It took just over a year but they fell in love with a beautiful patio home in West Kelowna. Their new home was priced at just under $700,000 so they knew they had the funds available if they listed their home and it did not sell in time.


Over the last few months I have spent time at several open houses in West Kelowna with realtors I know. It has been interesting to chat with people about the specific things they are looking for in their retirement home.


Part of what we have talked about are future life plans. Many people have talked about wanting to do more travelling and / or spending winters in warmer places. As people ease into retirement their needs change. Homes in age-restricted gated communities with amenities like pools and recreation centres  are becoming more popular.


This coming weekend (Saturday March 16,2024 from 12:00pm to 2:00 pm) I will be at 3407 Ironwood Drive in West Kelowna, which is listed by Sharon Walton with Royal LePage Kelowna (MLS ®10302186).


If you are looking to right-size for retirement, a home like this might be exactly what you are looking for.

Tracy Head

Mortgage Broker

GET STARTED
Couple reviewing paperwork at a dining table beside a laptop in a bright home with mountain views
By Tracy Head September 16, 2026
If there is one question I have been asked more than any other over the past year, it is this: “Where do you think interest rates are going?” My honest answer is probably not as satisfying as people would like. I don't know. And I say that as someone who has spent years working in the mortgage business, watching rate cycles, talking to lenders every day and helping Canadians navigate everything from their first mortgage to renewals, refinances and investment properties. I am not an economist, and I certainly don't pretend to know where interest rates will be 12 months from now. What I can do is watch the numbers, listen to what the economists are saying, understand how the mortgage market is reacting and, perhaps most importantly, look at what I am seeing in the real world with actual borrowers. And right now, I think homeowners should be prepared for a period where rates may not move nearly as dramatically as they did a few years ago but they also may not give us the steady decline that some borrowers have been hoping for. So, where are rates headed? As of September 2026, the Bank of Canada's overnight rate is 2.25 per cent. The Bank has held that rate since late 2025. The interesting part is what happens next. Recent forecasts are far from unanimous. Some major financial institutions expect the Bank to remain at 2.25 per cent for an extended period, while others are forecasting gradual increases during 2027. Depending on the institution and the timing of its forecast, some projections have the overnight rate reaching somewhere around 2.50 to 3.25 per cent over the course of 2027. There are good arguments on both sides. The Bank of Canada has been dealing with an economy that has shown weakness, while inflation has generally been moving toward its target. At the same time, there are renewed inflation risks from energy prices and ongoing trade uncertainty. That leaves us in an interesting position. I wouldn't build a household budget around the assumption that rates are going significantly lower. But I also wouldn't panic and assume we are heading back to the five, six or seven per cent mortgage rates that Canadians experienced during the last major rate shock. My expectation (and this is simply my view, not an economic forecast) is that the next year could be more about stability and modest movements than dramatic rate changes. There is a reasonable possibility of some increases, particularly if inflation remains stubborn, but there are also economic conditions that could keep the Bank cautious. In other words, I think borrowers should plan for the possibility of higher rates without making the mistake of assuming they are inevitable. This is where variable mortgages get interesting I've had a lot of conversations with clients who chose—or needed to choose—a variable-rate mortgage. There is an important distinction here. Some borrowers choose variable because they believe rates will fall. Others choose variable because it is the only way the numbers work. Those are very different situations. The second group is the one I worry about more. I've had clients who qualify for a purchase at a particular price only because the variable mortgage gives them a payment that fits within their monthly budget. There isn't a lot of room between what they make, what the lender will approve and what the household actually needs to spend each month. For those borrowers, a quarter-point increase isn't just an interesting economic headline. It affects the family budget. And that's why I don't think the right question after your mortgage closes is simply, “What is the rate today?” The better question is: “How much room do I have if the rate goes up?” If you're in a variable mortgage, give yourself some breathing room If you have just finalized a variable mortgage and your budget is already tight, I would suggest doing something very simple. Don't immediately spend the difference between your mortgage payment and your maximum affordable payment. If your current mortgage payment is $3,000 but you know you could manage $3,300 if you had to, consider pretending the payment is already $3,300. Put that extra $300 into savings every month. There are a few advantages to doing this. First, you build an emergency fund. Second, if rates increase, you already have some room in your budget. Third, if rates remain where they are, you have accumulated money that can potentially be used toward your mortgage principal, an upcoming expense or another financial goal. It also changes the psychology of the situation. Instead of waiting for a rate increase and then scrambling to find another $200 or $300 a month, you've already built that money into your household routine. Don't wait until the renewal date to have the conversation Another mistake I see is borrowers waiting until three weeks before their mortgage renewal to start thinking about what they want to do. That's too late. If you have a variable mortgage, I suggest reviewing your situation periodically, particularly if your household income, expenses or debt have changed. And if rates start moving higher, don't immediately assume the answer is to break your mortgage and lock into a fixed rate. There are costs and trade-offs involved. Depending on the mortgage, there may be penalties to break it. Fixed rates can also move independently of the Bank of Canada's overnight rate because they are influenced by the bond market. Sometimes the best move is to stay variable. Sometimes converting to a fixed mortgage makes sense. Sometimes increasing your payment is the better answer. Sometimes the right answer is simply to do nothing and wait. That is where having an actual conversation with your mortgage professional can be valuable. Watch your payment—not just the interest rate This is particularly important for people with variable mortgages. Depending on the mortgage product, a change in the interest rate can affect the payment differently. Some variable mortgages have payments that change as the lender's prime rate changes. Others may keep the payment relatively stable for a period of time, with more of the payment going toward interest and less toward principal. Borrowers need to understand which type they have. I would encourage every variable-rate borrower to know three numbers: Your current payment. Your current interest rate. The rate at which your mortgage payment or amortization becomes a problem. That third number is the one that tends to get overlooked. What if rates start increasing? If we start seeing a series of rate increases, my advice would be to avoid making decisions based on fear. A quarter-point increase is worth paying attention to. It isn't necessarily a reason to panic. If rates rise, I'd suggest doing the following: Review your household budget and identify discretionary spending that can be reduced temporarily. Keep building or maintaining an emergency fund. Consider increasing your mortgage payment voluntarily if your budget allows. Make lump-sum payments when you have the ability and your mortgage allows them. Talk to your mortgage broker before breaking a mortgage or locking into another product. Find out what fixed-rate options are actually available rather than assuming today's advertised rate is the only option. Revisit your mortgage if your financial circumstances have changed significantly. Don't make a long-term decision based solely on what you think the Bank of Canada will do at its next meeting. The last point is important. Nobody knows exactly what the Bank of Canada is going to do next. I've been around long enough to see plenty of confident predictions turn out to be wrong. If you are reading this and thinking, “That's great advice, but I barely qualified for my mortgage in the first place,” then I would approach things a little differently. Your first priority should be cash flow. Don't take on a mortgage payment that leaves you with nothing left at the end of the month. And once your mortgage closes, don't immediately assume that because the lender approved you, you have to spend every dollar of your available income. Give yourself a buffer. If you can put $200, $300 or $500 a month into a separate savings account, do it. Call it your “mortgage rate fund.” If rates rise, that money is there. If rates don't rise, you've created a useful savings account. And if rates eventually fall, you've still benefited from developing the habit of living below your maximum mortgage payment. That is much more sustainable than trying to predict the Bank of Canada correctly every six weeks. The biggest mistake is betting your household on a forecast. The mortgage industry loves forecasts. So do newspapers. So do economists, investors and, apparently, people like me who spend far too much time talking about interest rates. But forecasts are forecasts. They change. The Bank of Canada's own outlook acknowledges significant uncertainty, and recent economic developments including inflation, energy prices and trade conditions can change the interest-rate picture surprisingly quickly. So rather than asking me, “Do you think rates will be lower next year?” I'd rather have a client ask: “What happens to me if they're not?” That's a much better mortgage question. If you can comfortably afford your mortgage at today's rate and have some room in your budget, you're in a much better position to ride out whatever happens next. If you're stretched to the limit, I'd rather see you address that now than wait for a rate increase to force the conversation. And if you're considering a variable mortgage because it's the only way the purchase works, that's not necessarily a bad decision but it should be a decision you make with your eyes open. Know what happens if rates rise by 0.25 per cent. Know what happens if they rise by 0.50 per cent. Know what happens if they don't move at all. And, perhaps most importantly, have a plan for each scenario. Because after years in the mortgage business, one thing I've learned is that the people who tend to sleep best at night aren't necessarily the ones who picked the perfect mortgage. They're the ones who gave themselves enough room that they didn't need to. Note: This column reflects my perspective as a mortgage broker and is intended for general information only. I am not an economist or financial adviser, and interest-rate forecasts are inherently uncertain. Mortgage decisions should be based on an individual's circumstances, financial position and risk tolerance. 
Couple standing in front of a suburban house, talking on the sidewalk near the driveway.
By Tracy Head September 4, 2026
One of the more interesting conversations I have with clients isn't always about which mortgage rate they should take. Sometimes, the bigger question is: How much money should you actually put into your home? For many Canadians, the answer seems obvious. If you have the money, put it into the house. A larger down payment means a smaller mortgage, lower monthly payments and less interest paid over time. And there is certainly a lot to like about that approach. But what if you also have a substantial investment portfolio that has been performing very well? Is it always better to take money out of your investments and put it into your home? Not necessarily. A real-world example I recently had a client situation that illustrates this perfectly. The client purchased a home worth $900,000. He had enough available capital to put down 50 per cent, or $450,000. Instead, he chose to put down 20 per cent — $180,000 — and keep the other $270,000 invested. His reasoning was straightforward. His investment portfolio had averaged approximately 23 per cent annually over the previous three years, and he believed the potential long-term growth of keeping that money invested outweighed the benefit of putting another $270,000 into his home. At first glance, the numbers certainly make the decision interesting. But before anyone sees a 23 per cent return and thinks this is an easy decision, there is an important point to make. A 23 per cent average annual return is an exceptional historical result. It is not a guaranteed return, nor should anyone assume that a portfolio will continue producing 23 per cent year after year. Many investments and portfolios don't come close to that level of performance. That's what makes this decision so personal. The case for putting more money into the house is that there is something very satisfying about paying down a mortgage. When you put an additional dollar into your home, you are reducing the amount you owe and, in turn, the amount of interest you will pay. Unlike an investment return, the savings from paying down your mortgage are much more predictable. Let's say, for example, your mortgage rate is 4 per cent. Putting $100,000 against that mortgage effectively saves you the interest you would otherwise have paid on that $100,000, subject to how your mortgage is structured and how long you keep the debt. A larger down payment can also mean: A smaller mortgage balance. Lower monthly payments. Less interest paid over time. More equity in your home from day one. Less financial stress for people who prefer carrying less debt. For someone who values certainty, paying down debt can be an excellent financial strategy. There is also an important Canadian mortgage consideration: 20 per cent is a significant threshold. Generally, a down payment of less than 20 per cent requires mortgage loan insurance, while 20 per cent or more allows you to obtain a conventional mortgage. Once you've reached that 20 per cent threshold, however, the conversation can become much more interesting. The biggest advantage of keeping some money invested is liquidity and diversification. Your home is an asset, but the money tied up in your home isn't particularly easy to access. If you put an additional $270,000 into the property, that money becomes home equity. If you leave that $270,000 invested, it remains part of your financial portfolio and may continue to grow. Depending on the investments, you may also have the ability to access some of that capital if circumstances change. In my client's example, $270,000 is a significant amount of money. If that money were to earn 23 per cent in a particular year, the gain would be approximately $62,100. Compare that with a 4 per cent mortgage. A 4 per cent cost of borrowing on $270,000 would represent approximately $10,800 of interest in the first year, before considering how the mortgage balance changes through payments. On the surface, that makes keeping the money invested look very attractive. But there is an important catch. Investment returns are not guaranteed. The mortgage rate represents a cost you can calculate. Your investment return is uncertain. Your portfolio could earn 23 per cent. It could earn 5 per cent. It could earn nothing. It could also lose money. That's the trade-off. Don't confuse a great three years with a guaranteed future This is probably the most important point I'd make to anyone considering this strategy. Past investment performance is not a promise of future performance. My client's portfolio averaging approximately 23 per cent over three years is impressive. But three years is a relatively short period when you're making a decision that could affect your finances for decades. Markets go through good periods and bad periods. A portfolio that has performed exceptionally well can experience a significant downturn. And unlike your mortgage payment, you can't count on your investment portfolio producing a specific return next year. That's why I would never tell a client that keeping their money invested is automatically better than paying down their mortgage. It isn't. There is also something to be said for peace of mind. Personal finance isn't just about spreadsheets. Two people can look at exactly the same numbers and make completely different decisions — and both can be making perfectly reasonable choices. One person may look at a $450,000 mortgage and think, "I want that debt as small as possible." Another may look at the same mortgage and say, "I'm comfortable carrying the debt because I want to keep my investments working for me." Neither person is necessarily wrong. Your income, job stability, age, investment risk tolerance, tax situation, other debts, retirement plans and overall financial picture all matter. And perhaps most importantly, your ability to tolerate risk matters. If seeing your investment portfolio fall 25 per cent would cause you to panic and sell everything, keeping a large amount invested simply because it has performed well recently may not be the right strategy for you. There is a middle ground It doesn't have to be an all-or-nothing decision. You don't necessarily have to put either 20 per cent or 50 per cent down. You might choose 25, 30 or 35 per cent, for example, while keeping some money invested. That can provide a balance between reducing mortgage debt and maintaining investment exposure. The right answer depends on the individual. For some people, the predictable benefit of reducing debt will be more valuable than the potential investment gains. For others, particularly those with strong cash flow, a long investment horizon and a diversified portfolio, maintaining investments while carrying a larger mortgage may make more sense. So, what's the right answer? As a mortgage broker, my job is to help clients understand the mortgage side of the equation. I can show them how different down payments affect their mortgage amount, payments and borrowing costs. But I don't believe there is one universal answer to the question of whether you should put 20 per cent down or 50 per cent down. The client with the $900,000 home made a decision that made sense for his particular circumstances. He chose to put $180,000 down, keep approximately $270,000 invested and accept the investment risk that came with that decision. His portfolio's approximately 23 per cent average return over the previous three years certainly makes the decision look good in hindsight. But hindsight is a wonderful thing. None of us knows what the next three years will look like. The lesson isn't that you should keep your money invested because investments can outperform your mortgage. The lesson is that your home equity and your investment portfolio are two different pieces of your overall financial picture and deciding how much to allocate to each deserves careful consideration. A larger down payment can provide certainty, lower debt and peace of mind. Keeping money invested can provide liquidity, diversification and the potential for greater long-term growth but with substantially more uncertainty. There is no magic percentage that works for everyone. Disclosure: I am a mortgage broker, not a financial planner or investment advisor. The investment example above is based on an individual client's historical experience and should not be interpreted as a forecast or recommendation. Investment returns vary, and not all investments or portfolios perform anywhere near this level. Before deciding whether to put more money into your home or keep it invested, you should speak with your own qualified financial advisor or financial planner to determine whether the strategy makes sense for your individual circumstances. Sometimes the best mortgage decision isn't simply about getting the smallest mortgage possible. It's about finding the balance between debt, investments, risk and peace of mind that works for you.