Facing the risk of losing your home can be one of the most stressful experiences of your life. If you’ve fallen behind on mortgage payments, you may have heard the term “Power of Sale” come up, especially if you live in Ontario or other provinces where lenders can use this legal process. But what exactly is a Power of Sale in Canada, and how can homeowners avoid it?
In this blog, we’ll explain how Power of Sale works, how it differs from foreclosure, and most importantly, what steps you can take to prevent it from happening even if you’re already in financial trouble.
What Is the Power of Sale in Canada?
Power of Sale is a legal process that allows lenders to sell a property when the borrower defaults on their mortgage. It’s the most common mortgage enforcement tool used in Ontario, Newfoundland, New Brunswick, and PEI.
Instead of going through a lengthy court foreclosure process, lenders can quickly take control of the home, sell it, and use the proceeds to pay off the mortgage and related costs.
Key Features of Power of Sale:
- No court approval required in most cases
- Lender does not own the home, just sells it on your behalf
- Do you have any leftover equity after debts and legal fees are paid
- Faster process compared to judicial foreclosure.
Power of Sale vs Foreclosure – What’s the Difference?
Many homeowners confuse Power of Sale with foreclosure, but they are very different.
| Feature | Power of Sale | Foreclosure |
| Provinces Used | Ontario, NB, NL, PEI | BC, AB, SK, MB |
| Court Involvement | Minimal | Mandatory |
| Home Ownership | You retain ownership | Lender takes ownership |
| Timeline | Faster (2–3 months) | Slower (6–12 months) |
| You Keep Equity? | Yes (after debt is paid) | No – lender keeps equity |
Power of Sale gives you a better chance of walking away with your remaining home equity, if you act quickly.
What Triggers a Power of Sale?
Power of Sale is triggered when a borrower breaks the mortgage contract. This could include:
- Missing multiple mortgage payments
- Defaulting on property tax or insurance payments
- Violating terms of the mortgage (e.g., using the property for rental without permission)
Once the lender issues a Notice of Sale, the clock starts ticking. You typically have 35 days to bring your mortgage back into good standing, pay the arrears, and stop the sale process.
The Risks of Ignoring a Power of Sale Notice:
If you ignore the notice and take no action:
- The lender can list your home for sale
- You may lose thousands in home equity due to legal and sales fees
- Your credit score will take a major hit
- You may face a deficiency judgment if the sale proceeds don’t cover the mortgage
Even worse, the emotional toll can be devastating. Families are forced to move, renters are evicted, and it becomes harder to secure housing in the future.
How to Stop a Power of Sale in Canada?
If you’ve received a Notice of Sale or are worried about default, here are the steps you can take right now to protect your home.
1. Bring Your Mortgage Back to Good Standing:
If you can catch up on missed payments (including interest, penalties, and legal fees), the lender will stop the process. This is called “redeeming” the mortgage.
But many homeowners don’t have the cash available, that’s where refinancing can help
2. Refinance with a Private Lender or Second Mortgage:
If you have enough home equity, you may be able to refinance your mortgage through an alternative lender, even with bad credit.
Refinancing Options Include:
- Private mortgage: Fast approval based on home equity
- Second mortgage: Borrow against your home without breaking the first mortgage
- Equity takeout: Use funds to clear arrears and stop Power of Sale
Learn more about refinancing options with Mortgage Squad
3. Sell Your Home Before the Lender Does:
If you can’t refinance or pay off the arrears, a smart move may be to sell the property yourself before the bank steps in. This way:
- You control the sale price
- You can hire your own real estate agent
- You avoid legal costs and preserve more equity
Don’t wait until the house is already listed by the lender, it’s often too late.
4. Work With a Mortgage Broker Right Away:
When dealing with Power of Sale, time is your most valuable asset. A licensed mortgage broker can:
- Review your Notice of Sale
- Arrange urgent financing
- Negotiate with your lender on your behalf
- Connect you to lawyers or real estate agents if needed
Connect with a Mortgage agent team Now For
How to Prevent Power of Sale in the First Place?
Avoiding Power of Sale starts long before you fall behind. Here’s how to reduce the risk of mortgage default:
- Build an emergency fund: (at least 3–6 months of mortgage payments)
- Avoid overborrowing: don’t stretch your budget to the max.
- Maintain good credit to access flexible refinance options.
- Don’t ignore warning letters from your lender.
- Contact your broker or lender at the first sign of trouble.
FAQs:
1. What is Power of Sale in Canada?
Power of Sale is a legal process that allows lenders to sell a property when a borrower defaults on their mortgage, without taking ownership of the home.
2. How does Power of Sale work in Ontario?
In Ontario, once a borrower defaults, the lender can issue a Notice of Sale and sell the home after a 35-day redemption period, using the sale proceeds to pay off the debt.
3. What is the difference between Power of Sale and foreclosure in Canada?
Power of Sale is faster and doesn’t involve the court system, while foreclosure is a court-ordered process where the lender takes ownership of the property.
4. Can you stop a Power of Sale in Canada?
Yes, you can stop a Power of Sale by paying off the arrears, refinancing the mortgage, or selling the property before the lender finalizes the sale.
5. How long does a Power of Sale process take in Canada?
The Power of Sale process typically takes 2 to 3 months, but it may vary based on province and the lender’s timeline.
6. Do you lose equity in a Power of Sale?
You may lose some equity due to legal and sale costs, but any remaining funds after debts are paid will be returned to you.
7. What happens if your house is sold under Power of Sale?
If your home is sold, the lender repays the mortgage and legal fees from the sale proceeds. You receive any leftover equity but lose ownership of the property.
8. Can I refinance to avoid Power of Sale in Canada?
Yes, refinancing through a private or alternative lender can provide the funds to pay off arrears and stop the Power of Sale process.
9. Will Power of Sale affect my credit score?
Yes, a Power of Sale can negatively impact your credit score, making it harder to qualify for future loans or mortgages.
10. Is Power of Sale legal in all provinces in Canada?
Power of Sale is legal in provinces like Ontario, New Brunswick, Newfoundland, and PEI. Other provinces use foreclosure or judicial sale methods.
Final Thoughts – Take Control Before the Lender Does:
Power of Sale may seem like an unstoppable force, but it’s not. It’s a legal process with clear timelines and options. If you’re proactive, you can refinance, sell, or even save your home before it hits the market.
The key is speed and expert advice. Waiting will only reduce your options.
If you’re worried about losing your home or have already received a notice, don’t panic, take action. Mortgage Squad is here to guide you through refinancing, equity takeout, or a structured exit strategy that protects your future. Facing Power of Sale? We Can Help. Book a free consultation with Mortgage Squad. Contact Us Now. No judgment. Just honest, expert solutions for homeowners in crisis.