Getting a Notice of Sale in the mail is frightening, but it is not the end of the road. In Ontario, a power of sale can legally be stopped at any point up until the sale actually closes — not just during the first 35 days. Whether you catch it the day it arrives or after your home has already been listed, you almost always have more time and more options than the letter makes it feel like you do.
This guide walks through exactly how power of sale in Ontario works under the Mortgages Act, what’s happening to arrears and interest rates in 2026, and the five realistic ways homeowners stop a sale before it’s too late.
Quick answer: You can stop a power of sale in Ontario by (1) paying the arrears to reinstate the mortgage, (2) refinancing with a new lender, (3) using a private or second mortgage, (4) selling the property yourself before the lender does, or (5) negotiating a repayment plan or defending the claim. Acting inside the first 35 days gives you the most options and the lowest cost.
Power of sale is a lender’s contractual right, built into virtually every standard Ontario mortgage or charge, to sell a property after the borrower defaults — without first going to court for an order. It’s set out in Ontario’s Mortgages Act, R.S.O. 1990, c. M.40, and it’s the reason Ontario almost never uses judicial foreclosure the way some U.S. states do.
Two things make it different from foreclosure, and both matter to you:
- You keep the equity. The lender can only recover what it’s owed plus reasonable costs. Any surplus after the sale must be paid to you.
- You keep the right to redeem. Ontario courts have confirmed that your right to pay off the debt and stop the sale lasts until the lender actually enters into an agreement of purchase and sale — not just until a 35-day deadline passes.
That second point is the most misunderstood part of power of sale, and it’s why so many homeowners give up too early.
The Power of Sale Timeline: Step by Step
Every case follows the same statutory skeleton, even though the pace differs by lender. Here’s what happens and what you can still do at each stage.
| Stage | What Happens | Legal Basis | What You Can Still Do |
|---|---|---|---|
| 1. Missed payment / default | You fall behind on payments or breach another mortgage term. | Mortgage contract | Call the lender immediately; catch up before fees stack up. |
| 2. Demand letter | Lender or its lawyer demands payment, usually within weeks of default. | Mortgage contract | Pay arrears, or start refinancing/selling before legal costs grow. |
| 3. Notice of Sale | Formal statutory notice served on you and everyone with an interest in the property. Cannot be issued until default has continued at least 15 days. | s. 31–32, Mortgages Act | This starts your protected redemption window. |
| 4. Redemption period | A mandatory standstill of at least 35 days (commonly 40 days where a spouse occupies a matrimonial home). The lender cannot list, sue, or take possession during this window. | s. 22, s. 32, s. 42, Mortgages Act | Pay arrears + reasonable costs to reinstate — you usually don't need to repay the full balance. |
| 5. After the notice expires | Lender can list the property, sue for the debt/possession, or both. Even now, you can redeem in full up until a sale agreement is signed. | s. 22(1)(a) | Refinance, sell voluntarily, or negotiate — the door isn't fully closed. |
An average Ontario power of sale, from missed payment to closed sale, typically takes around three months — sometimes longer if the lender’s notice is defective or the property doesn’t sell quickly. That’s real time you can use.
Why Power of Sale Cases Are Rising in 2026
If it feels like you’re hearing about power of sale more often lately, you’re not imagining it. A few current data points explain why:
- Mortgage arrears are climbing. Canada-wide, mortgages 90+ days in arrears rose to roughly 0.24% by late 2025/early 2026, up from about 0.13% in early 2020, according to CMHC data cited by industry reporting.
- Ontario is leading the increase. Ontario’s arrears rate has risen sharply faster than the national average, with the Greater Toronto Area seeing some of the steepest year-over-year jumps of any market in the country.
- The renewal wave is the trigger. Roughly 1.15 million Canadian mortgages are renewing in 2026, many of them originated when rates were near record lows and now resetting several points higher.
- Power-of-sale listings have followed arrears upward across Ontario, particularly in markets where households took on larger mortgages during 2020–2022.
The good news buried in this data: even with the increase, arrears remain a small fraction of all Ontario mortgages, and lenders still overwhelmingly prefer to be repaid rather than to sell your home. That preference is exactly what makes the five strategies below work.
Why Power of Sale Cases Are Rising in 2026
Your options — and their cost — depend heavily on where rates sit today.
| Rate | Current Level (Sept 2026) |
|---|---|
| Bank of Canada overnight rate | 2.25% |
| Bank of Canada bank rate | 2.50% |
| Big bank prime rate | 4.45% |
| 5-year insured variable | ~3.60% |
| 5-year insured fixed | ~4.19% |
| B-lender fixed (1-year) | ~5.09% |
| Private first mortgage | 6.0%-10% |
| Private second mortgage | 8.0%-13% |
Rates change with each Bank of Canada announcement (next scheduled for October 28, 2026) and vary by lender, credit profile, and loan-to-value. Confirm current pricing with a licensed mortgage broker before deciding.
5 Ways to Stop a Power of Sale in Ontario
The right option depends on how much equity you have, your income and credit, and how far the legal process has already gone. Most cases resolve using one of these five paths.
1. Pay the Arrears and Reinstate the Mortgage
This is the cheapest and simplest fix, and it’s your right under section 22 of the Mortgages Act. If your lender demanded the full mortgage balance under an acceleration clause, you generally don’t have to pay that whole amount — just the missed payments, interest, and the lender’s reasonable legal and administrative costs, paid before the redemption period ends.
Do this if: You have a temporary income gap (job loss, medical leave, divorce) that’s now resolved, and you can raise the arrears from savings, a family loan, or a short-term line of credit.
2. Refinance With a New Lender
If you have equity and your credit or income has recovered, refinancing pays out the existing mortgage in full — including arrears and legal costs — and replaces it with a new, current mortgage. A-lenders (banks) offer the lowest rates but the strictest qualifying rules; B-lenders (alternative/monoline lenders) are more flexible on credit and income documentation, usually at a moderate rate premium.
Do this if: Your loan-to-value is under roughly 80% and your income can be documented, even if imperfectly.
3. Use a Private or Second Mortgage
When a power of sale is already underway, banks typically won’t approve a new loan — but private lenders will look past legal action, bruised credit, or self-employment income if there’s enough equity in the property. A private lender pays out the lender pursuing the power of sale directly, which halts the legal process immediately.
Private funding is fast (often 3–10 business days) but expensive, and it should be treated as a bridge, not a permanent solution — the goal is usually to refinance into a conventional mortgage again within 12–24 months.
Do this if: You have significant equity (loan-to-value under about 75%) but can’t qualify at a bank or B-lender on short notice.
4. Sell the Property Yourself
Selling voluntarily, before the lender lists it, protects your equity and your credit far better than letting the power of sale run its course. You control the timeline, the listing price, and the sale terms, and you can often close faster with a cash buyer if the redemption window is tight.
Do this if: You don’t want to keep the property, or your income and credit situation makes refinancing unrealistic in the time you have left.
5. Negotiate, Get Insolvency Advice, or Defend the Claim
Lenders would generally rather be repaid over time than sell a property, so a realistic repayment plan is often on the table — especially with credit unions and smaller institutional lenders. If your debt problem extends beyond the mortgage, a Licensed Insolvency Trustee can explain whether a consumer proposal fits your situation; mortgage debt is treated differently than unsecured debt in insolvency, so get professional advice before assuming this route helps. If the lender’s notice was defective, improperly served, or the amounts claimed are wrong, a real estate litigation lawyer can also formally defend the claim.
Do this if: You want to keep the home long-term and can support a modified payment plan, or you believe the lender didn’t follow the Mortgages Act correctly.
Comparing Your 5 Options
| Option | Speed | Relative Cost | Credit Impact | Best For |
|---|---|---|---|---|
| Pay arrears (reinstate) | Immediate | Lowest | Minimal if paid in time | Short-term hardship now resolved |
| Refinance (A/B lender) | 2–4 weeks | Low-moderate | Neutral to positive | Good equity, recovering income/credit |
| Private/second mortgage | 3–10 days | Highest (rate + fees) | Neutral (stops legal action) | Strong equity, time-sensitive, credit issues |
| Sell voluntarily | 2–8 weeks | Moderate (selling costs) | Protects credit vs. forced sale | No intent to keep the property |
| Negotiate / insolvency advice / defend | Days-weeks | Low-moderate (legal fees possible) | Varies by outcome | Want to keep home; procedural defects; broader debt load |
Current Private & Second Mortgage Rates in Ontario (2026)
Because private and second mortgages are the fastest way to stop a power of sale once legal action has started, it helps to know what pricing looks like right now. Rates below are general market ranges, not a quote — always confirm current pricing with a FSRA-licensed mortgage broker.
| Mortgage Type | Typical Rate Range | Typical Fees |
|---|---|---|
| Private first mortgage (urban, LTV under 65%) | 6.0%-9.0% | 1%-3% of loan amount |
| Private first mortgage (higher LTV / rural) | 9.0%-12% | 2%-4% |
| Private second mortgage (urban) | 8.0%-12% | 2%-5% |
| Private second mortgage (rural / higher LTV) | 11%-15% | 3%-6% |
| B-lender fixed (1-year) | ~5.0%-6.5% | 0.5%-1.5% |
Example: On a $200,000 private second mortgage at 10% interest-only, you’d typically pay roughly $1,650–$1,700 per month in interest, plus an upfront lender/broker fee commonly in the $6,000–$10,000 range. Most lenders cap combined loan-to-value at 75%–80%.
Frequently Asked Questions
Can a power of sale be stopped after the property is listed?
Yes. Your right to redeem the mortgage in full continues until the lender actually signs an agreement of purchase and sale — listing the property does not end your options.
How much notice does a lender have to give in Ontario?
At least 35 days after a valid Notice of Sale is served (40 days where a spouse occupies the home as a matrimonial home), and the notice cannot even be issued until the default has continued for at least 15 days.
Do I have to repay the entire mortgage to stop it?
Not necessarily. Under section 22 of the Mortgages Act, you can typically reinstate by paying the arrears plus the lender’s reasonable costs, rather than the full balance, as long as you act before the redemption period ends.
Will a power of sale hurt my credit?
Yes, significantly — arrears, legal action, and a forced sale all report to your credit file. Acting early through refinancing or a voluntary sale generally causes far less long-term credit damage than letting the process run to completion.
Is power of sale the same as foreclosure?
No. In foreclosure, the lender can take ownership of the property outright. In an Ontario power of sale, the lender must sell the property, and any surplus after the debt and costs belongs to you.
Talk to a Professional Mortagage Before Your Options Run Out
Every power of sale case is different, and the deadlines in the Mortgages Act are unforgiving once they pass. If you’ve received a Notice of Sale, the highest-value thing you can do today is get a clear picture of exactly what’s owed and how much time you actually have left.
[Book a free, confidential consultation with our mortgage team →] [See our refinancing options for homeowners in arrears →] [Read our guide to Ontario mortgage renewal rates →]
About the Author
Faizal Garasia is a licensed mortgage broker (FSRA Lic. #10557) with over 15+ of experience arranging private, alternative, and traditional mortgage financing across Ontario.He specializes in helping homeowners in arrears, self-employed borrowers, and clients facing power of sale compare their financing options side by side.