A power of sale notice is frightening, but it is not the end of the road. The most important thing is to act early and get advice.
When a mortgage is in default, a lender may start a process to sell the home to recover the debt. In Ontario, rules set out notice periods and steps that the lender must follow. This guide explains in general terms what that can mean and what some people do. It is not legal advice, so please speak to a lawyer as soon as you can.
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1A power of sale is a process where a lender sells a property to recover a mortgage that is in default. Ontario has rules about the notice a lender must give, and you generally have a period in which to fix the default.
2Options may include catching up on the payments and costs, refinancing with another lender, working out a payment plan with your lender, or selling the home yourself. Which of them is possible depends on your situation.
3Early action matters most. Time, equity and options all shrink as costs and arrears grow. A private lender can sometimes provide a short-term refinance if there is enough equity and a plan to move to a better arrangement.
4Costs can be significant: arrears, legal fees charged by the lender, lender and broker fees on any new loan, and an appraisal. Approval of any new financing is not guaranteed.
Get ready
What lenders will ask you for
The notice or letter you received from the lender or their lawyer, and any other legal documents
Your mortgage statement and a record of missed payments
Your latest property tax bill and proof of home insurance, and details of any tax arrears
Government photo ID for every owner on title
A short explanation of what led to the arrears and what has changed since, plus income proof
Your options
Which kind of lender fits you
Option 1
Speak to a lawyer
First step. A lawyer can explain the notice, your rights, the timelines and the choices available to you.
Option 2
Talk to your lender
Some lenders may agree to a payment arrangement. Get anything agreed in writing.
Option 3
Refinance with a different lender
An alternative or private lender may pay out the arrears when equity is strong enough and a plan is in place. Costs are higher, so plan an exit.
Option 4
Sell the home
Selling yourself can sometimes protect more equity than a forced sale. Your lawyer and a real estate professional can advise on timing.
Avoid these
Common mistakes
!Ignoring letters or avoiding calls. Silence removes time and options.
!Waiting until the last days to look for financing. Even quick lenders need time for an appraisal and legal work.
!Taking on any loan without seeing the total cost and the exit plan, because a rushed loan can cause the next problem.
!Relying on advice from anyone who is not a lawyer for your legal rights. Do not try to hide assets or delay the process in ways the law does not allow.
Take action
Your first steps
1Read the notice carefully and note the dates. Contact a lawyer right away.
2Gather the notice, your mortgage statement, property tax bill, ID and any income proof.
3Write down what happened, what has changed and how you can make payments from now on.
4Start the intake so a broker can check whether refinancing options may exist for your situation.
5Compare every cost in writing, ask your lawyer to review any new loan, and have a clear exit plan before you sign.
The intake
What your application will ask
Your online application goes one topic at a time and saves every answer and document as you go, so you can stop and come back. It never runs a credit check, and a licensed mortgage professional reviews it and follows up.
For power of sale help borrowers
What is the home worth, where is it, and what is owed on it, including arrears, other mortgages and tax arrears?
What does the notice say, and what dates does it show?
What caused the missed payments, and is your income stable now?
Have you spoken to a lawyer, and do you have a plan to repay or move to a bank lender later?
Plus the basics everyone answers 13
Your full name, email, mobile number and the best time to call.
The city you live in, and whether you are a Canadian citizen, permanent resident, or other status.
Are you applying alone or with someone else? If with someone, their name and how you are related.
Your goal: buy, refinance, renew, take out equity, or consolidate debt?
The property type (house, condo, multi-unit) and the city it is in.
Will you live in it, rent it out, or both?
The purchase price or estimated value, and your target closing or renewal date.
Your down payment or available equity, and where it comes from (savings, RRSP/FHSA, a gift, sale of another property).
Your approximate yearly household income before tax.
Your monthly debt payments: car loans, credit cards, lines of credit, student loans, support payments.
Your own estimate of your credit score: excellent, good, fair, poor, or not sure.
In the last 7 years, any bankruptcy, consumer proposal, collections, or missed mortgage payments?
May the broker contact you? (A credit check is only ever run later, with your separate written consent.)
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Answers
Questions people ask
What is a power of sale in Ontario?
A process in which a mortgage lender may sell the property when the mortgage is in default. Ontario has rules about notice and timing. A lawyer can explain how they apply to you.
How long do I have?
It depends on your notice and your mortgage, so read it closely and speak to a lawyer straight away. Do not wait for the last day.
Can I stop the sale?
Sometimes the default can be corrected by paying what is owed or refinancing before the sale is completed. Whether that is possible depends on your situation. A lawyer can advise.
Can a private lender help?
In some cases, if there is enough equity and a believable plan, a private or alternative lender may refinance the arrears. It costs more, and it is subject to approval, so the exit plan matters.
What does it cost?
Arrears and the lender legal costs, plus on a new loan a higher rate, lender and broker fees, legal and appraisal costs. Ask for every cost in writing.
Does starting the intake affect my credit?
No. It is only questions. A credit check, if needed, comes later and only with your permission.
General information, not mortgage, legal or tax advice. Lender rules change and every application is reviewed on its own facts. Your application and documents are stored privately and go only to a licensed mortgage professional at Top Mortgages Inc; they are never sold, and no credit check is run without your separate written consent.