Facing a power of sale in Ontario can feel overwhelming, but it doesn’t mean you have to lose your home. If you’ve fallen behind on your mortgage payments and received a notice of sale, you still have options. The key is to act quickly and understand the legal, financial, and strategic tools available to you. This guide outlines steps on how to get out of power of sale, what the process involves, and what steps you can take today to protect your equity and your home.
Understanding the Power of Sale Process in Ontario
What is a Power of Sale?
A power of sale is a legal process lenders use in Ontario to recover unpaid mortgage debt. Unlike foreclosure, where the lender takes title to the property, a power of sale allows the lender to sell the property without owning it. This process is faster and more cost-effective for lenders.
The Legal Notice Timeline
- 15 days after default: The Lender can issue a Notice of Sale
- 35+ days redemption period: Borrower can pay arrears to reinstate mortgage
- If payment is not made: Lender can move to sell the home through a real estate agent
Key takeaway: Time is critical. Once the notice is issued, fees and penalties add up quickly.
Costs and Consequences
- Legal fees, interest penalties, and realtor costs are deducted from sale proceeds
- A homeowner typically receives less than market value
- Damaged credit score and difficulty securing new mortgage financing
Common mistake: Assuming that the lender is obligated to wait longer or negotiate before taking action
Options to Get out of Power of Sale
Bring Your Mortgage Current (Reinstatement)
If you can pay all missed payments, fees, and penalties, you can reinstate the mortgage. This stops the power of sale and lets you keep your existing mortgage terms.
Refinance with a Private Lender
Private lenders can move fast—sometimes within 48 hours—and don’t rely heavily on credit scores. While interest rates may be higher, refinancing can give you the funds to repay arrears.
Important to note: Private financing often works best as a short-term solution while planning your next steps.
Second Mortgage to Catch Up on Arrears
Homeowners with equity may qualify for a second mortgage, which can cover arrears and legal costs.
Common myth: You need perfect credit to qualify for a second mortgage. In reality, equity matters more than credit.
Sell the Property Before the Lender Does
Selling on your own terms allows you to access market value and avoid legal fees tied to a lender-directed sale.
File a Consumer Proposal or Bankruptcy (Last Resorts)
While not ideal, these options can temporarily stop legal action. However, they have long-term credit implications.
What Not to Do
Ignoring Notices or Deadlines
Every missed day adds interest and fees. Ignoring notices won’t make the problem go away.
Relying on Verbal Agreements
Always get any payment arrangements or extensions in writing. Verbal promises may not be enforceable in court.
Waiting Too Long to Seek Help
The earlier you act, the more options you have. Waiting until the last moment reduces your negotiating power.
How a Mortgage Broker Can Help
Access to Specialized Lenders
Brokers work with private and alternative lenders who are familiar with urgent financial situations. These lenders are often more flexible than traditional banks when it comes to credit scores, income verification, or property condition. Brokers know which lenders are open to higher-risk borrowers and can help you secure funding when time is of the essence.
Fast Application and Approval
Brokers can expedite the process, gather documents quickly, and match you with the right lender. Because they work with lenders who specialize in quick-turnaround files, they understand how to prioritize paperwork, coordinate with appraisers and lawyers, and streamline communication so you don’t lose precious days in the power of sale timeline.
Preserve Home Equity
A broker helps you avoid unnecessary penalties and ensures you exit the situation with as much equity as possible. By offering strategies like second mortgages or bridge loans, brokers can create a temporary financial buffer that prevents your property from being sold under distress. This can give you more control, better sale terms, or time to refinance under improved circumstances.
Consulting a Lawyer to Get Out of Power of Sale
When facing a power of sale in Ontario, one of the smartest and most time-sensitive actions you can take is to consult with a real estate lawyer. While a mortgage broker helps with financing options, a lawyer ensures your legal rights are protected and can guide you through the complex web of Ontario’s real estate laws.
Why Legal Guidance Matters
- Understanding Notices and Deadlines
Power of sale notices come with strict legal timelines. A real estate lawyer will interpret the language of the Notice of Sale and ensure you’re fully aware of what’s required and by when. - Verifying Lender Procedures
Important to note: Lenders must follow a legal process under Ontario’s Mortgage Act. A lawyer can review whether proper procedures were followed—incorrect filings or notices may open the door to a legal challenge or delay. - Negotiating with the Lender
Some homeowners assume it’s too late to negotiate. Common myth. A lawyer can often open a dialogue with the lender or their legal representative to buy time, propose repayment terms, or explore settlement options.
What a Real Estate Lawyer Can Do For You
- Review the mortgage agreement and arrears details
- Request a detailed statement of claim or redemption figure
- File a court application if there are irregularities
- Work alongside your mortgage broker to coordinate urgent financing
Key Takeaway:
Hiring a lawyer doesn’t mean you’re going to court—it means you’re protecting your rights. Even if you’re planning to refinance or sell the property, legal advice can help you preserve your equity, avoid unnecessary fees, and navigate the process confidently.
Final Thoughts – Act Fast, Protect Your Home
Facing a power of sale in Ontario isn’t the end, but it is a clear signal that time is no longer on your side. The most important thing you can do is act fast and decisively. Whether you’re working to catch up on payments, considering a refinance, or planning to sell your property, the sooner you take action, the more control you retain over your financial future.
To get out of power of sale, it’s essential to gather the right team around you. Mortgage brokers can connect you with emergency financing options, lawyers ensure you’re protected legally, and real estate professionals can guide you if selling becomes the best route. Procrastination only increases costs, stress, and the risk of losing your home.
Key takeaway: Your home is one of your most valuable assets, both emotionally and financially. Taking steps now to get out of power of sale can mean the difference between preserving your equity or watching it disappear under legal fees and lender decisions. Be proactive, seek advice, and explore your options fully.
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