A Lifeline for Homeowners Struggling with High-Interest Debt

Owning a home in Canada is a major achievement. But what happens when the cost of everything else, from groceries to credit card interest, starts to overshadow that success? For millions of homeowners, rising interest rates and stubborn inflation are creating a financial squeeze that’s impossible to ignore, driving up consumer debts and straining monthly budgets.

The numbers don’t lie. According to Statistics Canada, there is now almost $42,000 of non-mortgage consumer debt per Canadian household.¹ This amount represents billions of dollars of credit card debt, car loans, personal loans, personal lines of credit and other unsecured loans taken out by Canada’s 15 million households.²

When debt payments become unsustainable, the financial strain can become a burden. For Canadians looking to get out from under that burden, traditional options involved refinancing or consolidating debt. But what if there was a solution that didn’t involve taking on more debt? What if the key to financial breathing room was already in your hands, locked within the value of your home?

Enter the Home Equity Sharing Agreement (HESA) from Clay Financial. It’s an innovative, debt-free way to unlock your home equity—with no interest rate, no monthly payments and no need to sell your home. With a HESA, homeowners can tap into their home equity today by sharing their home’s future appreciation with Clay at the end of the HESA.

The Hidden Pressures Facing Canadian Homeowners

The financial pressure on Canadian homeowners is evolving and the statistics highlight some of the current challenges:

• Missed Mortgage Payments: Mortgage delinquency rates in Ontario reached 0.23% in the second quarter of 2025, up from 0.09% two years ago in Q2 2023. This is the highest mortgage delinquency rate in over 9 years (since Q1 2016).³
• Rising Homeowner Insolvency: In 2024, homeowners represented 5% of all insolvent Canadians, an increase from 4% the previous year. The average insolvent homeowner is carrying $72,510 in unsecured debt on top of their mortgage.⁴
• Shrinking Financial Resilience: In 2024, 23% of Canadian homeowners were not confident that they will be able to make their future mortgage payments.⁵ In 2025, 27% of homeowners are generally not comfortable with their current level of mortgage debt.⁶

A New Path Forward: What is a HESA and How Does It Work?

Given the challenging debt climate in Canada, some homeowners need smarter, more flexible solutions. A Home Equity Sharing Agreement (HESA) can offer more optionality when it comes to dealing with homeowners debt. It isn’t a loan. Instead of borrowing against your home, you are accessing a portion of its value today in exchange for sharing a percentage of its future appreciation with Clay Financial. A HESA is an investment in your home and Clay Financial becomes your partner for the ups and the downs.

Importantly, you can get a HESA from Clay Financial even if you have a mortgage and/or a home equity line of credit. Many homeowners are comfortable with their mortgage payments but need help with other debts. A HESA allows you to keep your current mortgage in place while accessing the equity you need to eliminate higher-interest debts. This gives you the flexibility to fine-tune the mix of financing that works best for you and your goals, unlike some all-or-nothing solutions like selling your home or taking out a reverse mortgage.

Here’s what that means for you:

• Receive a lump-sum cash payment at the start of your HESA
• Zero interest compounding in the background
• No monthly payments during your HESA
• Flexible term up to 25 years
• Sell your home anytime without penalty
• Continue to own and live in your home

It’s a partnership designed to relieve financial pressure, not add to it.

How a HESA Can Tame Your Debt: Three Real-World Scenarios

Use Case #1: Break Free from High-Interest Credit Card Debt

The Problem: Households carrying balances on their credit cards are paying over 20% APR in interest. With daily compounding, a typically 20.99% APR becomes an effective annual interest rate of 23.35%. Minimum payments barely touch the principal, compounding interest drains your monthly budget over time and your credit score starts to fall. For households that aren’t able to pay off their balance, they can quickly feel trapped as their debt grows and they lose access to other financial products. 

How a HESA Can Help:

• Total consumer debt elimination: Use the lump sum from your HESA to pay off your entire credit card balance in a single transaction.
• End compounding interest: Stop the effects of compound interest, which is causing your debt to grow even in months where you don’t borrow more.
• Get off the debt treadmill: Move beyond making minimum payments month after month, and the stress that comes with it.
• Immediate cash flow improvement: By clearing your monthly credit card bill, you instantly free up cash for savings and other goals, giving you financial breathing room.

Use Case #2: Avoid Costly Personal Loans

The Problem: Homeowners often turn to personal loans to consolidate consumer debts. While this can be a solution, it doesn’t necessarily relieve the pressure on household budgets, as it often simply replaces multiple monthly payments with a single, larger one. For homeowners with bruised credit, even a personal loan secured against their home might not bring relief from high interest rates, as some come with interest rates of 19.99% APR or higher. This adds another expensive, long-term loan to their credit report.

How a HESA Can Help:

• Avoid new debt obligations: Access cash from your equity without adding a new loan to your financial profile, preserving your borrowing capacity for the future and starting you on a path to repairing your credit score.
• Improve your monthly budget: With no monthly payments, a HESA allows you to pay off old debts without committing to new monthly payments.
• A proactive financial tool: Instead of layering debt upon debt, a HESA allows you to solve the root problem by using the value of your home equity to pay off consumer debts before they become an unsustainable burden.

Use Case #3: Escape Expensive Payday Loans

The Problem: When faced with urgent cash shortages, a growing number of homeowners are turning to high-cost payday loans. A 2023 report by the Financial Consumer Agency of Canada (FCAC) found that 16.7% of mortgaged homeowners who were behind on their bills used a payday loan.⁷ Since payday loans can carry high fees and have to be paid back quickly (from a couple weeks to a couple months), borrowers can find themselves trapped under fast-growing debts if they cycle from one payday loan to another. FCAC notes that a 14-day payday loan charging $14 per $100 borrowed has a cost of borrowing equivalent to 365% APR.⁸

How a HESA Can Help:

• Avoid a debt cycle: With a one-time infusion of cash and no interest, a HESA helps you avoid the cycle of ever-growing payday loans (one report⁹ from the US found that more than 4 out of 5 payday borrowers end up renewing their loan for the same amount or more).
• Eliminate monthly strain: The average insolvent homeowner owes $12,424 to payday lenders.¹⁰ That’s over 8 times the maximum amount that can be borrowed with a payday loan, suggesting the burden of monthly (or more frequent) repayments became unsustainable for those homeowners. With no monthly payments, a HESA reduces the strain on your household budget rather than adding to it.
• Leverage your largest asset: For the 41% of payday loan users who are homeowners,¹¹ a HESA empowers you to use your most valuable asset to create a long-term financing solution.

A Path to Financial Control

Homeowners across Canada who are struggling with consumer debts are looking for a smarter path forward. Adding more debt, or replacing one type of debt with another, has not worked for everyone.

A HESA from Clay Financial offers a powerful alternative that works with you, not against you. Whether you’re managing high-interest debt, facing a major life transition or simply need financial breathing room, it’s time to explore a solution that leverages the wealth you’ve already built in your home equity.

Learn more about how a HESA works and how much a HESA costs on our website. Then, when you’re ready, find out how much equity you can unlock with a free estimate and start your journey toward a sustainable financial future – without taking on new debt.

1. Based on analysis by Clay Financial of national household credit liabilities from Statistics Canada; n.b., Statistics Canada includes home equity lines of credit from chartered banks in household non-mortgage debt but we have excluded them from our analysis, as they are secured by collateral mortgages. ↩︎
2. Includes households that own their home (~10 million) and those that rent (~5 million). ↩︎
3. Based on data from the Canada Mortgage and Housing Corporation on mortgage delinquency rates. ↩︎
4. Based on analysis by Hoyes Michalos in their Annual Bankruptcy Study. ↩︎
5. Based on analysis by CMHC in its 2024 Mortgage Consumer Survey. ↩︎
6. Based on analysis by CMHC in its 2025 Mortgage Consumer Survey; n.b., the question from 2024 regarding homeowners’ comfort with making future mortgage payments was either not asked in 2025 or not included in the 2025 report. ↩︎
7. Based on analysis by the Financial Consumer Agency of Canada in FCAC Report: The Financial Well-being of Canadian Homeowners with Mortgages (June 2023). ↩︎
8. Based on information provided online by the Financial Consumer Agency of Canada on payday loans. ↩︎
9. Based on analysis by the Consumer Financial Protection Bureau in CFPB Data Point: Payday Lending. ↩︎
10. Based on analysis by Hoyes Michalos on the Canadian payday loan industry. ↩︎
11. See footnote 10. ↩︎