Power of Sale in Ontario
How Does Power of Sale Work in Ontario?
If you have just received a Notice of Sale, the first thing you need to understand is how does power of sale work in Ontario and how much time you actually have. This page walks through the process stage by stage, shows you what a real notice looks like, and lays out the real solutions, including equity-based financing that stops the sale.
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Power of sale is the process an Ontario lender uses to sell a property after the borrower defaults on the mortgage, without going to court. It is the standard enforcement route in this province, and it moves on a fixed schedule set out in the Mortgages Act. Knowing where you sit on that schedule tells you how much room you have to act.
If you own your home and there is equity in it, this process can almost always be stopped, and the equity you have built is what makes it possible. There is more than one way out, from financing that reinstates the mortgage, to a prepaid loan that gives you breathing room with no monthly payments, to simply selling on your own terms instead of the lender's. If there is little or no equity left after the mortgage and any registered debts, we will tell you that plainly rather than take you through an application that cannot work. This page is here to help you understand the process either way, and to show you exactly what your options are.
How Power of Sale Works in Ontario, Stage by Stage
The process follows a set sequence under the Mortgages Act. Each stage has its own timing, and understanding which stage you are at tells you how much time remains and which options are still open.
Stage 1
Default
The process begins when you break a term of the mortgage. Usually that is a missed payment, but it can also be a lapsed insurance policy or unpaid property taxes. Your lender contacts you, adds late charges, and issues a demand for the arrears. Nothing is registered on title yet, and this is by far the cheapest stage at which to fix the problem. If you are here, start with our page on missed mortgage payments.
Stage 2
Notice of Sale
Under section 32 of the Mortgages Act, the lender cannot issue a Notice of Sale until the default has continued for at least 15 days. Once that period passes, the lender serves the notice, prescribed as Form 1 under the Act, on you and on every other party with a registered interest in the property, including any second mortgage holders, lien claimants, and execution creditors. The notice states the default, sets out the full amount required to bring the mortgage current, and names a date after which the property may be sold. From this point the lender's legal costs are added to what you owe.
Stage 3
Redemption Period
The notice must give you a redemption period of at least 35 days to pay the arrears plus the lender's costs and reinstate the mortgage. Where the property is a matrimonial home and the notice is mailed, that window commonly runs closer to 40 days, because a spouse is entitled to the same notice. This is the stage most homeowners are in when they call us. It is short, but it is enough time to arrange financing if you start immediately.
Stage 4
Possession and Listing
If the redemption period passes without payment, the lender can take steps to obtain possession and list the property for sale. They are required to act in good faith and to make a reasonable effort to obtain fair market value, but they have no incentive to hold out for the best offer, only to recover what they are owed. Even at this stage the sale can usually still be stopped, right up until the property is actually sold.
Stage 5
Sale and Distribution of Proceeds
After the sale, the proceeds pay the first mortgage, then the selling and legal costs, then any other registered charges in order of priority. Whatever is left is returned to you. Unlike a foreclosure, the lender does not keep any surplus. The practical problem is that enforcement costs and a sale run for speed rather than price routinely consume a large share of the equity a homeowner had built, which is why stopping the process early almost always leaves you better off.
What a Notice of Sale Looks Like
A valid Notice of Sale is not a free-form letter. It is a prescribed document, Form 1 under the Mortgages Act, and it must contain specific information. Below is an illustrative example so you can see what each part means. The numbered markers point to the notes underneath.
Illustrative only. Names, addresses, figures, and dates are fictional and shown for explanation. Your own notice governs your file — read it carefully and check the dates on it.
How to Read the Notice
① Who it is served on. The notice goes to every mortgagor and, separately, to anyone else with a registered interest, such as a second mortgage lender or a lien holder. If your home is a matrimonial home, your spouse is entitled to their own notice, which is what commonly stretches the waiting period to around 40 days.
② The mortgage it relies on. The notice identifies the specific mortgage and the land. If any of these details are materially wrong, the notice can be defective, which is one reason to have it reviewed rather than assume it is valid.
③ The default. This states exactly what you failed to do. It cannot be issued until the default has continued at least 15 days.
④ The amount to redeem. This is what it takes to reinstate the mortgage: the arrears, the per diem interest that grows every single day, taxes the lender has advanced, and their legal costs. These figures climb the longer the file runs, which is why acting early costs less.
⑤ The date that matters most. This is the earliest date the property can be sold, and it must be at least 35 days after the notice. Count the days from here. This is your window to arrange financing, and every day inside it is worth more than the one after it.
⑥ Where to pay. Payment is made to the lender's solicitor, not the lender directly. If you are arranging financing to reinstate the mortgage, your own lawyer deals with theirs to get an exact payout figure good to the closing date.
What a Power of Sale Really Costs You
The reason to act early is not only to keep the home. It is money. A power of sale that runs its course costs a homeowner in two directions at once, and both come straight out of the equity you have built. Here is the honest comparison between letting the process run and taking control of it while there is still time.
| If the power of sale runs its course | If you act while there is still time | |
|---|---|---|
| Who controls the sale | The lender | You |
| Price achieved | A sale run for speed, aimed at recovering the debt | Full market value, sold properly |
| Legal and enforcement costs | Added to your payout, growing every week | Stopped where they are |
| Your remaining equity | Whatever survives the costs and the rushed price | Preserved |
| The timeline | The lender's clock | Yours, within reason |
| Privacy | A public listing and forced sale | Kept private |
The difference in your pocket at the end is rarely small. Between enforcement costs and a sale that leaves money on the table, homeowners routinely lose a significant share of the equity they spent years building, along with the privacy of handling it quietly. Almost none of that has to happen if you move while the window is still open.
Your Options for Getting Out of It
A power of sale can be stopped at almost any point before the property is actually sold. What that looks like depends on your situation, whether you want to keep the home, and whether the problem is the arrears themselves or a temporary loss of income underneath them. These are the routes we most often arrange for Ontario homeowners.
Stop it and stay in the home
The most common outcome. We arrange financing secured against the equity in your home, based on the equity rather than your credit score, and the funds pay out the arrears and the lender's costs and reinstate the mortgage. Depending on your file that might be a second mortgage registered behind your existing first, private mortgage financing where speed matters most, or a full refinance that clears the arrears and resets the file. The sale stops and you keep your home.
Breathing room with no monthly payments
Sometimes the arrears are not the real problem. A temporary loss of income is, a layoff, the end of a contract, an illness, a business that had a bad year. If your income will recover but you need time, a forced sale is the worst possible outcome, because it turns a temporary problem into a permanent one.
For situations like these we can often arrange a prepaid home equity loan. The interest for the term is paid up front and built into the loan, so there are no monthly payments to find while you get back on your feet. It stops the power of sale, clears the arrears, and gives you a clear runway, typically about a year, to recover your income, refinance to a conventional lender, or sell the property in your own time rather than under a lender's clock. It is a short-term bridge rather than a long-term fix, so it works best where there is a realistic exit, and we will always be straight with you about whether it fits. Subject to appraisal and lender approval.
Sell on your own terms, not the lender’s
Not everyone wants to keep the home, and deciding to sell is a completely valid choice. But there is a world of difference between selling your home yourself and having a lender sell it out from under you. When you sell it, you choose the agent, you set a sensible timeline, you present the home properly, and you capture the full market price. When a lender sells under power of sale, the priority is recovering what they are owed, the sale is often rushed, and their legal and enforcement costs come out of your equity first.
Financing that stops the power of sale can simply buy you the time to list and sell the property yourself in an orderly way, keeping control of the process, the proceeds, and your privacy. For a lot of homeowners this is the difference between walking away with the equity they built and watching most of it disappear into a forced sale.
If you are 55 or older
Homeowners aged 55 and over have another route to stop a sale with no monthly payments: a reverse mortgage. It works differently from the options above, and our reverse mortgage page explains exactly how, who qualifies, and what it does and does not involve.
Whichever route fits, the full walkthrough of how the numbers are assessed, with worked examples, is on our main stop a power of sale page.
Frequently Asked Questions
How does power of sale work in Ontario?
Power of sale lets a lender sell a defaulted property without going to court. After a default continues at least 15 days, the lender serves a Notice of Sale, which gives a redemption period of at least 35 days to pay the arrears and costs and reinstate the mortgage. If it is not paid, the lender can take possession and sell, returning any surplus to the homeowner.
How long does the power of sale process take in Ontario?
The minimum is 15 days of default before a Notice of Sale, then a redemption period of at least 35 days, so the earliest a sale can happen is roughly seven weeks from the first missed step. In practice it often runs longer, but the dates on your own notice are what govern your file.
Is power of sale the same as foreclosure?
No, although almost everyone uses the word foreclosure for both. Foreclosure is a court process in which the lender takes title to the property and keeps any surplus. Power of sale does not involve the court, and any money left after the debts and costs are paid is returned to you. Ontario lenders overwhelmingly use power of sale.
Can I get financing with no monthly payments to buy time?
In many cases, yes. For homeowners facing a temporary loss of income, we can often arrange a prepaid home equity loan, where the interest for the term is paid up front so there are no monthly payments while you recover. It stops the power of sale and gives you a runway, usually about a year, to get back on your feet, refinance, or sell on your own terms. It is a short-term bridge that depends on your equity and lender approval.
Can I sell my home myself to stop a power of sale?
Yes, and it is often the better financial outcome. Selling the home yourself on the open market usually captures full market value, while a lender's power of sale is run to recover the debt and their costs come out of your equity first. Financing that stops the power of sale can also simply buy you the time to list and sell the property in an orderly way, keeping control of the timeline and the proceeds.
What does a power of sale cost me if I let it run?
You lose in two ways. The lender's legal and enforcement costs are added to what you owe and grow the longer it runs, and a sale run for speed rather than price commonly falls short of full market value. Together these routinely consume a significant share of the equity you had built. Acting early, whether to stop the sale or to sell on your own terms, keeps that money in your pocket.
Can I stop a power of sale after I receive a Notice of Sale?
Yes. Paying the arrears together with the lender's legal and enforcement costs reinstates the mortgage and stops the sale, and this can be done at any point before the property is actually sold. Most files we fund are at exactly this stage. The full range of options is set out on our stop a power of sale page.
Do I need good credit to stop a power of sale?
No. The lenders we work with assess primarily on the equity in your property, not your credit score or income. Missed payments, collections, a consumer proposal, or a power of sale already in progress do not automatically rule you out. If you own a home with equity, you very likely have options.
Have a Notice of Sale? Find Out Where You Stand
Tell us your property value, your mortgage balance, and the date on your notice, and we will tell you honestly whether there is a solution, whether that is stopping the sale, buying time with no monthly payments, or selling on your own terms.
Get a Free Assessmentor call 1-855-668-3074
