Default and the notice period
Once a mortgage payment is missed and stays unpaid, the lender can issue a Notice of Sale under the Mortgages Act. This notice gives the homeowner 35 days to bring the account current or resolve the arrears before the lender can proceed further. This window is the most important stretch of time in the whole process.
What happens after 35 days
If the arrears are not paid within the notice period, the lender can move to list and sell the property. Unlike foreclosure in some other provinces, power of sale does not require a lengthy court process for straightforward residential mortgages, which is why it tends to move faster in Ontario than people expect.
- Notice of Sale served
- 35 day redemption period
- Listing and sale if unresolved
Redeeming the mortgage
At any point before the sale actually closes, the homeowner generally has the right to redeem the mortgage by paying the full arrears, costs and fees. This is often done through a refinance or a private second mortgage that covers the shortfall, which stops the sale process even after the notice period has expired.
What happens to leftover equity
If the home sells for more than what is owed on the mortgage plus costs, the surplus belongs to the homeowner, not the lender. In a market like Toronto where home values are often high relative to the mortgage balance, this means owners in default still have real equity worth protecting through a faster resolution.
Frequently asked questions
- Can I stop a power of sale once it has started?
- Yes, paying the arrears in full along with costs before the sale closes typically stops the process, and refinancing is a common way to raise those funds.
- Does power of sale hurt my credit as much as bankruptcy?
- It does show up as a serious mark on your credit report, but it is generally viewed as less severe than a bankruptcy or consumer proposal by future lenders.
- How much notice will I get before losing my home?
- By law you get a minimum 35 day notice period after default before the lender can take further steps, though the full process from missed payment to sale often takes longer.