Ontario seller guide · Mortgage trouble

Power of sale vs. foreclosure in Ontario

Updated July 27, 2026

The short answer: In Ontario, defaulting borrowers almost always face power of sale, not foreclosure. Under power of sale the lender sells the property and must return any surplus to you after the debt and costs are paid — and in most cases you can still redeem the mortgage or sell the house yourself right up until a lender's sale becomes binding.

The difference in one paragraph

Power of sale lets the lender sell the property under the mortgage terms and the Mortgages Act; the debt, arrears and enforcement costs come off the top, and any surplus belongs to you. Foreclosure is a court process where the lender takes title itself — and your equity with it. Foreclosure is slow and rare in Ontario; power of sale is the standard route because it's faster for the lender.

The timeline you're actually on

Typically the sequence runs: missed payments and lender letters; then a formal Notice of Sale, which in the standard case can be issued once you're 15 days in default and gives you at least 35 more days before the lender can take further sale steps; then, if nothing changes, the lender lists or sells the property, often after obtaining possession. Throughout most of that runway you retain the right to redeem — pay the arrears and enforcement costs (or the full balance, depending on the stage and your mortgage terms) and the process stops.

The part lenders don't emphasize

A lender under power of sale has a duty to obtain a reasonable price — not the best price. Their sale carries legal fees, real estate fees, possession costs and carrying costs, all deducted from your equity before any surplus reaches you. It is very common for an owner-led sale, even a fast one, to net meaningfully more than the same house sold under power of sale.

Your realistic options, in order of equity preserved

Bring the mortgage current or refinance. If the arrears are the whole problem and income supports it, redemption or a B-lender/private refinance buys time.
Sell it yourself — listed or direct. You control price and timing, the enforcement costs stop accruing, and the surplus is yours. A direct as-is sale trades some price for a closing fast and certain enough to beat the lender's clock.
Let the power of sale run. Sometimes unavoidable — but it's almost always the most expensive version of selling your own house.

Timing is the whole game

Every option above gets weaker as the process advances. The window between "Notice of Sale received" and "lender has a binding sale" is when you still hold the pen — and a real estate lawyer should be your first call in that window, before any buyer, including us. The Mortgages Act sets out the formal notice framework if you want the source itself.

Quick answers

Can I still sell my house after receiving a Notice of Sale?

In most cases, yes. Until the lender's own sale becomes binding, you generally retain the right to sell the property yourself and discharge the mortgage from the proceeds — and doing so usually nets you more than the lender's sale will.

Do I lose my equity in a power of sale?

Not automatically. After the debt, arrears, and enforcement costs are paid, the surplus must be returned to you. But those costs grow every month the process runs, which is why acting early preserves more.

How long does a power of sale take in Ontario?

The formal notice framework runs in weeks — commonly a Notice of Sale after 15 days of default with at least a 35-day window before further steps — but the full path to a completed lender sale usually takes several months. Exact timing depends on your mortgage terms and the lender.

This guide is general information for Ontario, current as of July 27, 2026 — not legal or tax advice, and not a substitute for it. Rules change and every situation differs; confirm your specifics with an Ontario lawyer (and accountant, where taxes are involved) before acting.