How to Stop Power of Sale on Your Home

What Is Power of Sale?

Power of sale is a legal process under Ontario's Mortgages Act (R.S.O. 1990, c. M.40) that allows a mortgage lender to sell your property when you default on payments. Unlike foreclosure (which transfers ownership to the lender), power of sale lets the lender sell the property on the open market. Any surplus after paying off the mortgage balance and costs is returned to you.

Mortgage Arrears Are Rising

If you are behind on payments, you are not alone. According to the Canadian Bankers Association, the national mortgage arrears rate climbed to 0.24% by August 2025, a 71% increase in under three years and the fastest rise since the global financial crisis.

Regional breakdown:

While more than 99% of mortgage holders remain current, the trend is accelerating, driven by borrowers renewing at higher rates after the Bank of Canada's aggressive hiking cycle of 2022-2023.

Source: Canadian Bankers Association, Mortgage Arrears Data (August 2025)

The Legal Timeline: Know Your Deadlines

Understanding the timeline under Ontario's Mortgages Act is critical because it dictates how much time you have to act:

The 35-day redemption period (or 40 days if the property is occupied by a married couple) is your most critical window. During this time, you have the legal right to stop the entire process by bringing the mortgage current.

Source: Ontario Mortgages Act, R.S.O. 1990, c. M.40, Sections 22-32

Your Legal Rights During Power of Sale

As a homeowner, you have important protections under Ontario law:

• Right of redemption: You can stop the process at any time before the sale closes by paying all arrears, penalties, and the lender's legal costs
• Right to sell: You can sell the property yourself at any time, as long as the mortgage debt is fully repaid from the proceeds
• Right to surplus: If the property sells for more than what is owed, you receive the difference
• Right to fair market value: The lender has a legal obligation to sell at a reasonable price and can be held liable for selling below market value

Four Options to Stop Power of Sale

Option 1: Pay the Arrears

If you can come up with the full amount owed (arrears plus penalties plus the lender's legal costs), you can reinstate the mortgage entirely. This is the simplest option but requires significant available cash.

Option 2: Refinance with a Private Mortgage

This is the most common solution for homeowners in power of sale. A private lender funds a new mortgage to pay off the arrears, penalties, and legal costs, stopping the process immediately.

Why this works: Private lenders focus on the equity in your property, not your credit score. Even if your credit has been damaged by the missed payments, you can qualify based on your home's value.

The private mortgage gives you 6-24 months to stabilize your finances, repair your credit, and eventually refinance with a traditional lender at a better rate.

Option 3: Sell the Property Yourself

If keeping the home is not viable, selling it yourself will almost always net you more than a lender's power of sale. You control the listing price, the agent, and the timeline (as long as you complete the sale before the lender does).

Option 4: Negotiate with Your Lender

Some lenders will work with you to create a repayment plan, especially if your difficulty is temporary (e.g., short-term job loss). This is less common with private lenders but worth exploring with banks and credit unions.

How Private Mortgage Refinancing Works in Practice

When we help homeowners stop power of sale, the process typically looks like this:

1. We review your situation and property details immediately
2. We connect you with a private lender who can fund quickly
3. An appraisal is ordered (rush appraisals are available for urgent situations)
4. The private lender pays off your arrears, penalties, and legal costs
5. The mortgage is registered on title through a lawyer
6. You start fresh with manageable payments

The entire process can often be completed within days when urgency requires it. Private lenders can approve in 24 hours and fund within 3-5 business days.

The Cost of Waiting

Every day you wait reduces your options. Once the 35-day redemption period expires, the lender can list and sell your property. Once a sale closes, your right of redemption is gone.

Do not ignore demand letters or Notices of Sale. Contact a mortgage broker who specializes in private lending immediately so you can understand your options and protect your home.