- Get Your Mortgage Commitment From Centum Financial Services Ltd Partnership #13054
Call Live Support
Have Questions? Talk To An Expert
Call Live Support
If you are currently facing the threat of losing your home, know this: receiving a Notice of Sale Under Mortgage does not mean the fight is over. The past few years have redefined financial stability for homeowners across Ontario and Canada. The comfortable mortgage payments once secured at 2% or 3% have evaporated, replaced by staggering renewal rates and the relentless pressure of soaring inflation on essential goods. This brutal economic shift has made it almost impossible for many to maintain their payments—a stress reflected in the fact that Ontario mortgage delinquencies are now at their highest levels in nearly a decade. When a homeowner defaults, the legal process known as Power of Sale is swiftly activated. This page cuts through the legal confusion and stress to provide you with a clear, step-by-step guide on the process, your legal rights, and the rapid private financing solutions available to help you stop the Power of Sale immediately and safeguard your most valuable asset.
“Power of sale” refers to a clause written into virtually all residential mortgage contracts in Ontario. It legally gives the mortgage lender the right to sell the property if you fall behind on payments (default on the loan).
Power of sale is the most common remedy lenders use to recoup the capital they loaned when a borrower defaults. Since the property acts as the primary collateral and can be sold efficiently, it’s a straightforward way for the lender to ensure repayment. Crucially, the lender does not take ownership of the property; they act only as a vendor to settle the outstanding debt. This means that after the sale, any surplus funds—the remaining equity after the debt and selling costs are paid—must legally be returned to you, the homeowner.
Power of Sale and Foreclosure might seem to be interchangeable terms as both are associated with borrowers defaulting on their mortgages, but they operate quite differently. In Ontario, understanding which process you face is critical, as it determines your potential financial loss or recovery.
Definition: It is a swift, non-judicial legal procedure (common in Ontario) allowing lenders to sell the property when borrowers default on their mortgage payments.
Definition: Foreclosure is a much lengthier, more complex court-driven legal procedure where the lender seeks to gain the absolute legal title of the property due to the borrower’s continuous default on payments.
While both processes aim to safeguard the lender’s interests when the borrower defaults, the Power of Sale is more about control and quick recovery of funds, whereas Foreclosure is about acquiring ownership and is generally more protracted and intricate.
Lenders tend to overwhelmingly prefer the Power of Sale in Ontario because of its efficiency and lower costs. It allows them to recuperate their losses swiftly without having to deal with the liabilities that come with ownership of the property (e.g., property maintenance, tenant issues, unexpected repairs). Furthermore, the PoS process preserves the lender’s right to pursue the former homeowner for any shortfall if the property sells for less than the amount owed—a right they generally forfeit in a completed foreclosure.
Call us today to speak to a licenced mortgage broker.
The Power of Sale is a contractual and statutory provision that enables a mortgage lender to seize and sell a property if the borrower has defaulted on their payments or breached other terms of the mortgage agreement. Here’s a breakdown of the key stages:
The process starts when the borrower commits a default—most commonly by missing a mortgage payment. The lender must generally wait at least 15 days after the default occurs before taking the next official step under the Mortgages Act, R.S.O. 1990, c. M.40.
The lender’s lawyer will send a formal document, typically the “Notice of Sale under Mortgage.” This serves as a formal intimation to the borrower and all other interested parties (like subsequent mortgage holders or lien claimants), stating that the mortgage is in default and detailing the steps required to halt the process.
Content: The notice itemizes the full amount due (known as the arrears), including missed payments, accumulated interest, penalties, and the lender’s legal/administrative costs incurred to date.
Timeline: This notice is sent out after the initial 15-day default period has passed.
The time provided to settle the listed amounts is known as the redemption period. This is the borrower’s most critical opportunity to stop the sale.
Duration: By Ontario statute, this period is a minimum of 35 days from the date the Notice of Sale is sent.
Action Required: To “redeem” or reinstate the mortgage, the borrower must pay all amounts listed in the Notice of Sale before the period expires. Doing so brings the mortgage back into good standing and legally halts the Power of Sale process.
If the borrower fails to rectify the default within the redemption period, the lender gains the right to proceed with enforcement.
Lender’s Next Action: The lender will file a Statement of Claim with the court, seeking repayment of the entire outstanding mortgage debt (not just the arrears) and a Writ of Possession to evict the current occupants.
Taking Control to Sell: Once the lender obtains the Writ of Possession and executes the eviction (usually via the Sheriff’s office), they take control of the property to prepare it for sale. The lender has a fiduciary duty to sell the property at a fair market value.
Taking immediate and appropriate action upon receiving the Notice of Sale Under Mortgage is crucial. This is the borrower’s window to resolve the discrepancies, prevent the loss of the property, and avoid further complications.
If the borrower fails to act and the property is ultimately sold, the proceeds are distributed in a strict order of priority:
Payment of the lender’s selling costs (real estate commissions, legal fees, etc.).
Repayment of the lender’s mortgage debt (principal, interest, and penalties).
Payment of any subsequent lienholders or creditors in order of priority.
Any remaining surplus equity must be returned to the original homeowner.
In simpler terms, the Power of Sale process is the lender’s method of recovering their money when a borrower defaults. It starts with a formal, time-sensitive notice and, if unaddressed, culminates in the forced sale of the property, with the borrower retaining their right to any remaining equity.
Receiving a Statement of Claim means the lender has moved the Power of Sale (POS) from a private contractual issue into a formal lawsuit in the Ontario Superior Court of Justice.
Why It Matters: This is no minor claim. The lender sues you primarily to get a court order for two things: to confirm their right to demand the entire, accelerated mortgage balance immediately, and to get permission to take physical possession of the home.
The 20-Day Trap: You have only 20 days to file a Statement of Defence with the court. Missing this deadline allows the lender to have you “noted in default.” This results in a Default Judgment, meaning the court automatically grants the lender everything they asked for (the money judgment and the right to possession) without a trial.
Stopping the Sale: Once the Statement of Claim is issued, you typically must pay the full mortgage principal, plus all interest and legal fees, to stop the process—paying only the missed arrears is usually no longer an option.
The Writ of Possession is the final, court-issued document that authorizes your physical removal from the property.
How it’s Obtained: After getting the Order for Possession from the judge, the lender’s lawyer applies for the Writ of Possession and files it with the local Sheriff’s Office (the Court Enforcement Office).
The Sheriff’s Role: The Sheriff is the only person in Ontario legally empowered to carry out an eviction and use force if necessary. Neither the lender nor their lawyer can physically remove you.
The Notice to Vacate: The Sheriff will serve a formal notice (sometimes called a Notice to Vacate) that sets a specific, final date and time for the eviction. You will typically be given a short window—often a few days to two weeks—to leave voluntarily.
Physical Eviction: On the scheduled date, the Sheriff will attend the property to physically remove any occupants and change the locks. At this point, the lender has legal and physical possession of the home and can move forward with selling it.
Once the lender has possession, they will sell the home, but you are still tied to the financial outcome.
Lender’s Duty to Sell: The lender must sell the property for a fair market value and take reasonable steps to achieve this (e.g., getting multiple appraisals, listing with a real estate agent on MLS). You, the homeowner, still hold the legal title to the property until the sale is completed.
Strict Payout Order: The money from the sale is distributed in a specific order:
All costs associated with the sale (legal fees, real estate commission, Sheriff fees, etc.).
The full mortgage debt (principal and interest) owed to the foreclosing lender.
Any other registered debts on the property (like second mortgages or liens).
Any surplus (leftover money) goes back to you, the original homeowner.
The Deficiency: If the sale price is not enough to cover all the debts and costs, the lender can use the judgment from the Statement of Claim to pursue you personally for the remaining shortfall, known as the deficiency. They can go after your other assets or income to collect this money.
The best advice for how to stop power of sale altogether is to sell your house on your terms. If you’re concerned about being able to make your mortgage payments, then selling will allow you to pay the mortgage off. You can then look for a property that would be more manageable or even consider renting. If you’re at risk of falling behind on mortgage payments and selling isn’t an option, then talk to your lender. Is it possible for you to get them the money in two payments? Is there a way to make payments more manageable or even defer them a little longer? If you’ve missed a mortgage payment already, it’s imperative to speak to your lender as soon as possible. Remember that a notice of sale will be issued after just 15 days. Once the process has started, you’ll have more limited time and more limited options. Finding yourself amidst a potential power of sale can be overwhelming. Here’s a guide to navigate through the process in Ontario effectively, ideally halting it in its tracks.
To avoid power of sale proceedings, selling your property on favorable terms is a sensible approach. If maintaining mortgage payments seems unsustainable, selling allows you to settle the mortgage, enabling you to explore more affordable properties or even consider leasing. You retain the right to sell the property privately throughout the Power of Sale process, right up until the lender has entered into a firm agreement of purchase and sale with a third party. This control is vital for maximizing your net profit from the equity.
If selling the property isn’t viable and there’s a looming risk of defaulting on mortgage payments, initiating a dialogue with your lender is crucial. Explore the possibility of fragmenting the overdue amount into manageable payments or negotiate to defer payments, making them more bearable. When speaking to the lender, ensure you clearly document all promises or agreements, as a verbal agreement alone is insufficient to halt a legal process.
If a mortgage payment has already been missed, it is paramount to communicate with the lender immediately, considering that a notice of sale is typically issued just 15 days post-default. Proactive engagement can lead to constructive solutions and prevent the escalation of the situation. The Notice of Sale initiates the Redemption Period (typically 35 days, or 40 days for a matrimonial home), which is the most critical window to restore the mortgage to good standing by paying the arrears, interest, and fees.
Once you’re in the middle of the process, time becomes of the essence and the options more restrictive. Navigating your choices judiciously and exploring potential remedies can assist in mitigating the consequences of the power of sale.
Stopping the power of sale process involves strategic actions, early interventions, open communications with the lender, and exploring all available avenues to find a solution. Whether it is selling the property proactively, negotiating with the lender, or seeking professional advice, each strategy could be a stepping stone towards resolving the situation and retaining ownership of your property.
If you’ve already received a notice of sale under mortgage, then you have a few options. The first is to pay the lender’s demands, as outlined in the demand letter.
Swift action at this point could keep the lender from progressing with the power of sale. Keep in mind that legal and administrative fees will add up as the process moves forward.
These fees will be charged back to the mortgage. That means you’ll be expected to pay them as well. Stopping power of sale as soon as possible is the best way to keep these fees from adding up and making it more difficult to bring your mortgage into good standing.
Minimizing the Cost: Every day that passes under a Power of Sale adds to the interest, late payment penalties, and the lender’s escalating legal fees, which are all added to your debt. You should demand a “Redemption Statement” or “Reinstatement Statement” from the lender’s lawyer, which outlines the exact, all-inclusive amount required to be paid by a specific date to halt the Power of Sale.
How can you stop the power of sale? You may want to consider a loan to stop power of sale. If you’ve been in your home for some time, you should have some equity in the property.
You can use home equity to pay mortgage arrears. By doing so, you can bring your mortgage back into good standing and stopping power of sale. This is sometimes known as a second mortgage to stop power of sale.
The Private Lender Solution: If banks have declined a re-financing application due to the existing default, a second mortgage from a private lender is often the only route. This private loan is specifically designed to bridge the gap, paying off the arrears and fees, thereby stopping the legal action, and providing you with a longer, manageable term (e.g., 6 to 12 months) to either improve your financial standing for a better mortgage or complete a non-forced sale of the home.
If you have good credit, you may be able to take out a personal loan. You may also have available credit, such as a line of credit or even a credit card, which can help you stop power of sale.
If these options aren’t available, then you may have savings you could use to bring your mortgage back into good standing.
Final Consideration: Selling to Protect Equity: If all other financing options fail and the Power of Sale proceeds to a Statement of Claim or Writ of Possession, your most effective strategy becomes a rapid, private sale. By selling quickly through a real estate agent, you ensure the lender is paid off, the remaining net proceeds go directly to you, and you avoid the costs and delays of a Sheriff-enforced eviction. This preserves your credit rating better than allowing the lender to complete the forced sale.
Once the redemption period is over, you may be afraid you’ll lose your home. There are still steps you can take to stop power of sale.
You may be able to pay your arrears and costs in court. If you were unable to come up with the financing before the redemption period expired, then going to court could bring the mortgage back to good standing.
The Court Process: After the redemption period expires, the lender often escalates the matter by issuing a Statement of Claim in court to seek a formal judgment for the outstanding debt and to obtain a Writ of Possession. If you are served with a Statement of Claim, you have a limited time (typically 20 days) to file a Statement of Defence. Engaging a legal professional at this stage is crucial, as they may be able to secure a court order allowing you a further, short extension to pay the arrears and fees, effectively bringing the mortgage back to good standing before a court grants the Writ of Possession.
Some lenders will demand repayment of the mortgage in full, plus any penalties and costs, at this point. A private mortgage to stop power of sale could be the solution. This allows you to pay off the existing mortgage and place the property under a new one.
Accelerated Payment: Once the redemption period has lapsed, the lender’s mortgage contract may stipulate that the entire outstanding principal balance becomes immediately due and payable (known as acceleration). In this situation, simply paying the arrears is no longer sufficient; you must pay off the entire mortgage debt, plus all accumulated costs.
Your best bet here is often to go to a mortgage broker. They can help you find lenders who are willing to extend the funds you need to cover the mortgage and any added costs.
Specialized Financing: Traditional banks are highly unlikely to lend to a homeowner facing a Power of Sale who has missed a major deadline. Private mortgage lenders, however, specialize in these time-sensitive, high-equity situations. A mortgage broker is essential because they have established relationships with these non-traditional lenders who focus primarily on the equity in your home, rather than your damaged credit score or income history. This financing is designed to provide the lump sum needed to Discharge the current demanding lender. (See: Private Mortgage Options To Stop Power of Sale)
Bringing the mortgage back into good standing is the best advice for how to avoid eviction. Once the lender successfully obtains a Writ of Possession, they can appoint the Sheriff to schedule a date to physically evict you from the property.
You can pay arrears until the lender enters into an unconditional agreement of purchase and sale with a new buyer. If that agreement contains a redemption clause, though, you can pay off the mortgage and stop the sale.
The Ultimate Deadline: Under Ontario law, your fundamental Right of Redemption is not strictly extinguished when the initial 35-day period expires. It remains intact until the lender has entered into a firm, unconditional Agreement of Purchase and Sale (APS) with a new buyer. This is why a swift private sale of your own home remains a viable option, even late in the process.
The Redemption Clause: Many lenders, as a matter of common practice, include a clause (often called a “redemption out clause”) in their APS with a new buyer. This clause makes the sale conditional upon the homeowner not redeeming the mortgage before the closing date. If this clause is present, and you secure the financing to pay off the full debt, you can halt the lender’s sale and keep your home, even after they have found a buyer.
It’s best to stop the process as soon as possible. As mentioned, the lender and their law firm will charge any fees associated with the power of sale process back to the mortgage. You’ll be responsible for covering them if you want to pay arrears or pay the mortgage off.
Escalating Costs: After the redemption period, the costs increase dramatically as the lender’s lawyers are now billing for complex court work, including filing the Statement of Claim and motions for the Writ of Possession. These legal fees, along with interest and administrative charges, are added to the mortgage debt. Waiting increases the total amount you must pay to save your home, making future financing more difficult due to reduced equity.
In rare cases, there may be a legal remedy to helping you stop power of sale and avoid eviction.
The lender must wait for the appropriate period to pass before they can progress through the power of sale process. If they take any step too soon, you can argue they acted in haste.
Statutory Timelines: The lender’s right to pursue a Power of Sale is governed by the Ontario Mortgages Act, which sets mandatory timelines. For example, the lender cannot issue a Notice of Sale Under Mortgage until the mortgage has been in default for at least 15 days.
The Standstill Period: After the Notice of Sale is delivered, a mandatory redemption period of at least 35 days begins. During this time, the Ontario Mortgages Act, R.S.O. 1990, c. M40: Section 32 prevents the lender from taking most further enforcement steps, such as taking possession of the property, listing it for sale, or applying to the court for a Writ of Possession.
An example might be a lender who issues a demand letter after 10 days instead of 15 days. The lender is acting in haste, trying to start the power of sale process too soon.
Another example would be a lender who issues a statement of claim or a writ of possession before the redemption period is over.
If the lender has acted in haste, then the entire process can be nullified. The lender would then need a court order to continue.
Consequence of Acting in Haste: If a lender fails to strictly follow the statutory timelines and procedures, a court may find that the Power of Sale is null and void or that the lender’s enforcement rights are suspended. This legal challenge can buy the homeowner critical time to secure refinancing or sell the property themselves. Legal arguments for procedural non-compliance are a key reason why engaging a lawyer early in the process is so important.
As the homeowner, you also have a right to information. You can request a statement of account and information about the power of sale proceedings. If the lender doesn’t respond within 15 days, the process may be suspended.
The Right to a Statement of Account: Section 22(2) of the Mortgages Act grants the mortgagor (homeowner) the right to demand a current, complete, and correct statement detailing the outstanding mortgage balance, all arrears, and any accrued costs. This is often referred to as a Discharge Statement. This statement is essential because you need to know the exact amount required to redeem the mortgage.
Suspension of Remedies: Under Section 22(3) of the Act, if the lender fails to provide this requested statement within 15 days of receiving the notice, their rights to enforce the mortgage are suspended until the statement is furnished.
If the lender responds to a request for information, but the information they provide is incomplete or incorrect, then the process can also be suspended.
Inaccurate Information: Even if the lender responds within the 15-day window, a court may rule that the enforcement process is suspended if the information provided in the statement is found to be incomplete or materially incorrect, as this directly impedes the homeowner’s ability to exercise their Right of Redemption by not knowing the true payoff amount. Failure to provide accurate information may even lead to a subsequent sale being set aside by the court.
In most cases, lenders will follow the letter of the law to avoid situations like this. It’s always a good idea to have legal representation on your side to make sure the correct process is followed.
Legal Scrutiny: Lenders and their law firms are highly aware of these statutory requirements and generally strive for strict compliance. However, complex situations, changes in payment amounts, or administrative errors do occur. Having your own legal counsel review all documentation can identify errors and create a legal defence that provides leverage or, in the best case, stops the Power of Sale entirely.
If you’re unable to stop power of sale, then the lender will sell your house. They use the proceeds of the sale to cover off whatever was owed on your mortgage.
What if the house sells for more than the remaining value of the mortgage? There are other costs that need to be covered, but any remaining proceeds belong to you. This remaining money is known as the surplus funds.
Order of Distribution: The Mortgages Act in Ontario dictates a specific order for how the sale proceeds must be distributed:
Expenses: All costs associated with the sale (e.g., real estate commission, legal fees, appraisal costs).
Primary Mortgage: Principal, interest, and any other amounts owed to the lender who initiated the Power of Sale.
Subsequent Encumbrances: Payment of all other registered debts and liens (e.g., second mortgages, line of credit, judgment creditors) in order of their legal priority.
Surplus: Any money left over is paid to the former homeowner.
Typically, there’s very little left over after the power of sale process. That’s because fees are charged back to the mortgage. These include:
Legal fees, which can range up to $30,000 (These fees are often higher than in a typical home sale because they cover litigation, eviction, and administrative work).
Real estate fees (Commissions for the listing and selling agent).
Penalties associated with being in arrears (e.g., fees for missed payments and high-interest penalty charges).
Administrative fees (e.g., property appraisal fees, inspection fees, and other lender costs).
If there are any outstanding liens on the property, then those must also be paid.
As you can see, the fees associated with power of sale can add up. If the sale of the house doesn’t cover the mortgage and all the fees, then you’ll be responsible for paying the difference.
Deficiency Judgment: Unlike a foreclosure (where the lender takes ownership and debt is often considered settled), in a Power of Sale, the borrower remains liable for any deficiency—the shortfall between the total debt owed (including all costs) and the final sale price. The lender is legally entitled to sue the borrower to recover this difference.
As a result, it’s often a better solution to find a private mortgage to stop power of sale. You can stop the process, avoid extra fees, and keep your home!
Avoiding power of sale is going to be on the minds of many homeowners in Ontario in the coming months. If you’re concerned about your ability to pay your mortgage, taking steps now can help you stop power of sale.
Refinancing to Save Equity: Securing a new mortgage or a second mortgage (often through a private lender who focuses on equity rather than credit score) is a primary strategy to stop the process. This allows you to pay off the accumulated arrears and all of the lender’s legal costs, reinstate your good standing with the original lender, and avoid the much higher costs, stress, and potential deficiency of a forced sale.
When homeowners are facing a Power of Sale because of a temporary financial setback (like job loss or illness) but have substantial equity, a unique short-term solution from private lenders may be available: Mortgages with Deferred or Pre-Paid Payments.
How it Works: The private lender can structure the loan to include all interest payments for the entire term (e.g., 12 months) directly into the loan amount. This means the new mortgage pays off the old lender’s arrears and all fees, and you do not have a single monthly payment due to the private lender for the entire term of that loan.
Benefit: This provides the homeowner with a crucial period of time (typically 6 to 12 months) to stabilize their income, repair their credit, and plan for a long-term solution (like selling the property privately or refinancing with a traditional bank) without the immediate pressure of making two mortgage payments.
Requirement: This solution is highly dependent on having sufficient equity in the home to cover the old debt, the new principal, and the pre-paid interest and fees.
If you’re already behind, then it’s time to take action. Get in touch with the experts and learn more about the options you have to stop power of sale and keep your home.
Get the best home equity loan rates from direct equity lenders.
Fast approval and funding to stop power of sale process.
You're approved regardless of your credit score or history.
No income or employment qualifications required.
Stop power of sale using your home equity. Approvals are based on equity.
Use your home equity to stop power of sale process or foreclosure process. Approvals are based on equity, not credit or income.
Get your free stop power of sale mortgage quote
Confirm property value and existing mortgage details.
Stop the power of sale process in just 48 hours.
We take pride in taking the time and effort to match up every individual homeowner and homebuyer with the best mortgage financing options and rates. With access to more than 200 participating mortgage lenders, there are mortgage solutions for all types of borrowers. We listen and understand your mortgage and real estate goals, and find the best mortgage terms tailored to your specific goals to save you thousands of dollars on your new mortgage.
(No Obligation)