Just thinking about these numbers makes me hyperventilate a little. Even with all that "equity", this is NOT a low-risk proposition! Toronto is quite possibly overvalued, and the same conditions that could prompt a sale could skew all the numbers against her.
If the market tanks, as it does from time to time, her place could EASILY lose enough market value to nuke most of her equity. If the economy takes a shit at the same time, which it normally does, and she stops getting rent, guess what? Not only is she unable to make the mortgage payment, she can't afford to maintain the house. Let's say this happens next year and she's paid down $5k in principal by then (balance $475k). Her $800K house is now worth $500K, which would let her walk away broke but owing nothing, so she goes for it. But the market is flooded and highly competitive, so without fresh paint and shiny new appliances, it doesn't sell. The balance starts going up a couple grand every month, and she gets a foreclosure notice. Do you step in and help? Do you jeopardize FIRE to save your credit?
This shit happens. It really did happen, to millions of people, just a few years ago. Maybe she'll be fine, maybe you'll go down with her when she's not. Your call :)