Power of Sale in Ontario: How It Works and What You Can Do

Getting a Notice of Sale under Mortgage from your lender is stressful, but a power of sale in Ontario is not the end of the road. You still have real options, and in most cases you still have equity worth protecting. This guide explains how the process works, how long it takes, and every path you can take to resolve it.

What is a power of sale in Ontario?

A power of sale is the legal process a mortgage lender uses to sell your home when you fall far enough behind on payments. It is written into almost every Ontario mortgage as a standard clause. The lender does not have to go to court to start it, which is why it is faster than foreclosure and why most Ontario lenders use it by default.

Once you fall roughly 90 days behind on your mortgage, the lender can issue a Notice of Sale under Mortgage. That notice starts a 35-day redemption period. If you do not bring the mortgage current or otherwise resolve the arrears in that window, the lender can list and sell the property.

Power of sale vs. foreclosure

People use these terms interchangeably, but they are not the same thing.

• Power of sale: The lender sells the home, recovers what you owe plus their costs, and returns any surplus to you. You keep any equity above the debt.
• Foreclosure: The lender takes ownership of the property. Any equity above the outstanding mortgage becomes theirs, not yours. It requires a court order and takes much longer.

In Ontario, foreclosure is rare because power of sale is faster and cheaper for the lender. This is actually good news for homeowners with equity, because a power of sale preserves your right to any surplus.

How long does a power of sale take?

Every situation is different, but a typical Ontario timeline looks like this:

Start to finish, most power of sale processes wrap up in four to six months. That is not a lot of time to organize your options, which is why acting early matters.

How to stop a power of sale in Ontario

You have more control than most homeowners realize, especially in the first 35 days after the Notice of Sale. Here are the realistic paths.

1. Bring the mortgage current

If you can pay the arrears plus the lender's legal and administrative costs during the redemption period, the power of sale stops and your mortgage continues as normal. Family loans, tapping a line of credit, or liquidating other assets are the usual sources.

2. Refinance with a new lender

Big banks rarely refinance a mortgage that is already in default, but private lenders and B-lenders regularly do. A new mortgage pays off the arrears and the existing lender in full, which stops the power of sale immediately. Rates are higher, but it can be a bridge to buy time while you get back on track or prepare a proper sale.

3. List the home traditionally

If you have enough equity and enough time, listing the home with an experienced local agent can produce a strong sale price. The tradeoff is time. Between prep, showings, and closing, this usually takes 60 to 120 days, which does not always fit inside the lender's window. If the sale does not close before the lender lists it, you lose control of pricing and negotiation.

4. Sell directly to a home buyer

A direct sale to a company like Peritus Properties is usually the fastest way to resolve a power of sale on your own terms. You get a written offer within a couple of days, pick a closing date as soon as a week or two out, and skip repairs, showings, and agent commissions. You still have to agree to the number, which means you keep control of the decision, and any equity above what the lender is owed comes to you at closing.

What happens to any surplus after the sale

Ontario law requires the lender to sell the property at a commercially reasonable price. After the sale closes, the proceeds are applied in this order:

• The outstanding mortgage balance plus accrued interest
• The lender's legal fees and selling costs
• Any secondary charges registered on title (second mortgages, liens, unpaid property taxes)
• Any surplus is returned to you, the homeowner

If you had significant equity going into the process, there is often a meaningful surplus. If you sold the home yourself before the power of sale ran its course, you would usually keep more of that equity because you avoid the lender's legal markups and forced-sale discount.

Situations we buy in

Power of sale is one of the situations we handle most often. It usually shows up alongside other pressures: a job loss, illness, divorce, a rental unit that stopped paying, or a home that needs repairs the owner cannot afford to make. If any of that sounds familiar, our approach to these sales is straightforward and low-pressure.

We buy across Ontario. Popular local pages: every city we serve, or jump directly to your area from that list.

Frequently asked questions