Read this first
This page explains your options. It will not push you toward a form. If you have received a legal notice, speak to a lawyer or a Licensed Insolvency Trustee as well.
Who this is for: Ontario homeowners who have missed mortgage payments or received a notice of sale from a lender, and want to understand the timeline and options.
On this page
If you are reading this with a letter in your hand, take a breath first. A power of sale notice is serious, and it also comes with time and with choices. What follows is general information about Ontario law. It is not legal advice, and a lawyer who reads your mortgage and your notice can tell you things this page cannot.
What power of sale means
Most Ontario mortgages contain a clause that lets the lender sell the home to recover its money if you default. Under the Mortgages Act, the lender cannot do that without giving a notice of exercising the power of sale, in the form set by the regulations, to the people listed in the Act. They include everyone with an interest in the property who shows up on the title records, such as another mortgage lender.
The notice must be given by personal service or registered mail to the person’s usual or last known address, or as the mortgage itself provides.
The timeline in the Act
The Act sets two clocks. The first says that where a mortgage gives a power of sale on a certain default, notice cannot be given until the default has continued for at least 15 days. The second says the sale cannot be made for at least 35 days after the notice has been given.
Those are minimums. Your mortgage terms and the notice itself may add detail, and lenders often take longer, so do not read the 35 days as a countdown to a sale on day 36. Write the dates from your notice on a calendar, and put a reminder well before each one.
What you can do before the sale
The Act has a protection that many borrowers never hear about. At any time before the sale, you can pay the amount that is due and be relieved from the consequences of the default. That amount covers the arrears and the lender’s necessary expenses, and it leaves out money that is not payable only because time has passed.
You can also ask the lender for a written statement of the arrears and expenses. Under the Act the lender must answer within 15 days, and until it does, its enforcement rights are paused. Ask for the figure in writing, and ask for it early, so that you know the real amount you are trying to reach.
Who to speak to first
A lawyer. If you have a notice, a real estate or mortgage lawyer can read the mortgage, check the notice and the dates, and tell you what the lender may and may not charge. If you do not know one, a legal clinic or a local bar association can point you to one. Ask about the cost of the first meeting when you call.
The lender is the second call. The Financial Consumer Agency of Canada advises borrowers who cannot pay to contact their bank as soon as they can. Relief options for banks it describes include extending the amortization or waiving fees or prepayment penalties, and a bank needs your express consent before it applies a relief measure. That page speaks about banks, and a private lender may not offer the same, but it costs nothing to ask.
A Licensed Insolvency Trustee is the third. They can tell you whether a consumer proposal, a legal process under which you offer creditors part of what you owe or more time, fits your situation. For a consumer proposal, the Office of the Superintendent of Bankruptcy says debts must total $250,000 or less, not counting a mortgage on your principal residence, and the proposal cannot run longer than five years.
The ways this can end
Most outcomes fall into four groups. You catch up, by paying the arrears and costs from savings, family help or a new loan. You refinance the first mortgage with a lender who will take the file. You sell the home yourself, on your own timeline and with your own agent, so you control the price and the date. Or the lender sells.
Selling it yourself is a hard thing to consider, and it belongs on the list. The Financial Consumer Agency of Canada notes that selling may be an option in severe cases. A sale you control, with time to market the home properly, may leave you with money in your pocket, while a rushed sale may not.
Where a second mortgage fits, and where it does not
A second mortgage can fit when the arrears are a one-time gap, caused by an illness or a layoff that has ended, and the first mortgage payment is affordable again. It does not fit when the budget was already broken. The worked example above shows how a loan that pays four missed payments leaves almost nothing over and adds interest on top of a payment you were already struggling to make.
If a loan is on the table, ask for the cost in dollars, the date it comes due, and what the lender will do if you cannot repay on that date. A lender that says yes very quickly to someone in default is not doing you a favour. Read how a consolidation loan works and use the calculator before you decide.
Keep a record
Keep every letter, envelope and email, and write down the date and time of every call with the lender. If the notice was sent by registered mail, keep the slip. These records help a lawyer check that the lender followed the Act, and they help you remember what was said.
What not to do
Do not ignore the letters, and do not stop opening the mail. Do not sign a loan on the day it is offered. Do not pay a fee up front to anyone who promises to stop the sale. And do not assume the process is over because it feels slow. The only dates that count are the ones on your notice and in the Act.
If you want to talk to a licensed mortgage professional in Ontario about refinancing or a second mortgage, you can check your options. It is a request for a call and nothing more, and you can say no.
Paying off four missed payments with a second mortgage
Made-up figures. The first mortgage payment is $2,400 a month, four are missed, and the lender adds an assumed $3,000 in legal costs and $400 in late charges. The second mortgage is $16,000, interest only at an assumed 12%, with an assumed 2% lender fee, 1.5% broker fee and $1,800 for legal, appraisal and title.
- Four missed payments
- $9,600
- Lender's legal costs
- $3,000
- Late charges
- $400
- Total to bring the first mortgage current
- $13,000
- New loan amount
- $16,000
- Fees on the new loan
- -$2,360
- Cash left after paying the lender
- $640
$320 lender, $240 broker, $1,800 legal and other
Questions people ask
How long do I have after a notice of sale arrives?
The Mortgages Act says the sale cannot be made for at least 35 days after the notice has been given. Your notice and your mortgage may set other dates, so read both and ask a lawyer to confirm the date that applies to you.
Can I stop a power of sale by paying the arrears?
The Act lets the mortgagor, at any time before the sale, pay the amount due, which is the arrears and the lender's necessary expenses, and be relieved from the consequences of the default. Ask the lender in writing for the exact figure.
Will a court decide whether the lender can sell?
The sections of the Act on notice and the waiting period do not mention a court order for an ordinary power of sale, but the Act also has rules a judge can apply. Whether a court gets involved in your case is a question for a lawyer.
Does this page apply outside Ontario?
No. It describes Ontario law only. Other provinces use different processes, and the province pages on this site set out what applies where you live.
Is a second mortgage a way out of power of sale?
Sometimes. A new loan can pay the arrears and costs, which stops the sale, but you then carry a more expensive loan on top of the first mortgage. It only helps if the first mortgage payments are affordable again afterwards.