Power of Sale Filings Climb in Ontario: A Spring 2026 Update

Power of Sale Filings Are Up

Ontario's power of sale process (the legal mechanism that allows a mortgage lender to sell a property after default) has been more active through the first months of 2026 than in any year since the early 2010s. The increase is not driven by any single factor. It is the cumulative effect of renewal payment shock, weaker employment in certain sectors, and elevated household debt working its way through the system.

For homeowners affected, the timeline is short and the stakes are high. Understanding the process and the available alternatives is the most important first step.

What Power of Sale Actually Is

Power of sale is the lender's contractual right, written into nearly every Ontario mortgage, to sell the property after default to recover the outstanding loan. Unlike foreclosure (which extinguishes the borrower's interest in the property entirely), power of sale aims to recover the debt while returning any surplus from the sale to the borrower.

In practice, Ontario lenders almost always use power of sale rather than foreclosure because it is faster and less expensive. The process is governed by the Mortgages Act of Ontario.

The 35-Day Redemption Window

Once a lender issues a Notice of Sale Under Mortgage, the borrower has a statutory 35-day redemption period. During those 35 days, the borrower can stop the process by:

• Paying the arrears, the lender's costs, and bringing the mortgage current, or
• Paying out the entire mortgage balance, lender's costs, and any accrued interest

After the 35 days expire, the lender can list and sell the property. Once a binding agreement of purchase and sale is signed, the borrower's redemption rights are extinguished and the sale proceeds even if the borrower later finds funds.

Source: Ontario Mortgages Act, R.S.O. 1990, c. M.40

The practical takeaway: time is the single most important variable in any power of sale file.

Why Filings Are Elevated in 2026

Three structural pressures are driving the increase:

Renewal payment shock. Five-year fixed mortgages taken near record lows in 2020 and 2021 are renewing into rates two to three percentage points higher. Households that stretched to qualify five years ago are seeing payments rise hundreds or thousands of dollars per month. Some cannot absorb the increase.

Variable rate cumulative impact. Although the Bank of Canada has cut rates meaningfully from 2023 peaks, variable rate borrowers paid the cost of those peak rates for nearly two years. The accumulated arrears and HELOC drawdowns from that period are still showing up in default statistics today.

Sector-specific employment softness. Layoffs and reduced hours in technology, construction, and parts of the public sector through 2024 and 2025 have left some borrowers without the income that originally qualified them.

These pressures are concentrated in the Greater Toronto Area, where property values, mortgage balances, and consumer debt are all highest. But the trend is province-wide.

The Three Outcomes for a Homeowner in Default

When a homeowner falls behind on their mortgage in Ontario, the path forward is one of three:

Outcome 1: Cure the default within 35 days. This requires bringing the mortgage current and covering the lender's legal costs. Most homeowners in this position do not have the liquid cash to do this from savings alone.

Outcome 2: Refinance to pay out the existing mortgage. This is where private mortgages most often come in. A new mortgage, typically from a private lender, pays out the lender holding the Notice of Sale, stops the process, and gives the homeowner 6 to 18 months to stabilize.

Outcome 3: Allow the sale to proceed. The lender sells the property and applies the proceeds to the debt. Any surplus returns to the borrower. Any shortfall (if the sale price does not cover the debt and costs) becomes a personal debt the borrower still owes.

How a Private Refinance Stops Power of Sale

The mechanics of stopping power of sale with a private mortgage refinance are straightforward, but the timing is unforgiving.

1. The homeowner contacts a mortgage broker who specializes in private lending
2. The broker orders a current appraisal, typically within 3 to 5 business days
3. The file is submitted to private lenders with capacity for emergency funding
4. A commitment letter is issued, often within 24 to 48 hours
5. Lawyers prepare the discharge of the existing mortgage and the registration of the new one
6. Funds are released and the existing lender is paid out, ending the power of sale process

Done efficiently, this can happen within 7 to 10 business days. With 35 days on the statutory clock, there is no room for delay.

What Lenders Look For

Private lenders evaluating a power of sale rescue file focus on three things:

Equity in the property. The new mortgage plus the lender fees and legal costs must fit comfortably within the property's value, typically at 75% LTV or less for an emergency placement.

An exit strategy. Lenders want a credible plan for repaying the private mortgage within 12 to 18 months, usually a refinance with a B-lender, a property sale, or improved income that supports a bank-level refinance.

Clear title and recent appraisal. Any title encumbrances (tax arrears, secondary judgments, condo arrears) need to be identified and addressed in the structure of the deal.

The takeaway for any homeowner facing power of sale: gather your most recent mortgage statement, your property tax bill, and any correspondence from your lender. These will be the first documents your broker needs to move quickly.

What to Do If You Have Received a Notice of Sale

If a Notice of Sale Under Mortgage has been issued against your property, three actions matter most:

1. Read the notice carefully and note the date the 35-day redemption period expires
2. Do not ignore correspondence from the lender's lawyer. Acknowledging the file does not waive any rights and may give you negotiating room
3. Contact a mortgage broker who specializes in private mortgages today. Timing is everything

For an in-depth look at the process, the lenders involved, and the structure of a power of sale rescue, see our dedicated page on stopping power of sale.

How We Can Help

The Private Mortgages has helped hundreds of Ontario homeowners stop power of sale through structured private refinancing. We work with lenders across Ontario, Alberta, and Manitoba, and we understand the urgency of these files. Most situations receive a clear answer within 24 hours of first contact.

If you or someone you know is facing power of sale, contact us today at (647) 270-3660 or apply online. We will assess the file, structure the right solution, and coordinate with lawyers and lenders to meet the redemption deadline.

For more information about our services, see our pages on private mortgages in Toronto, stop power of sale, and our full services list. Use our calculator to model what a refinance might look like for your situation.