How to Stop Power of Sale in Toronto and Ontario

    Ontario homeowners have experienced a very interesting year. On one hand, despite predictions from real estate professionals of a potential 18% drop in real estate value due to the ongoing pandemic real estate has continued to appreciate. The number of home sales has also increased despite predictions of widespread default among Ontario homeowners.

The average home price in Toronto has hit an all-time high of nearly 1 million dollars at 932,222 thousand. This average home price is an 11.2% increase from this time last year when the pandemic was not even on our radar.

    Even the number of properties that have fallen into mortgage default has remained surprisingly low throughout arguably the worst year of the pandemic. Currently, there are just over 2000 properties in mortgage arrears (2, 301) which represents less than one percent (0.11) of the total number of owned properties in the Province.

    Household and personal finances, however, may have taken a much harder hit throughout the pandemic with temporary layoffs, job losses, and reduced hours for some Ontario homeowners coupled with the high cost of owning a home in Toronto, the GTA, and elsewhere in the Province.

What is a Power of Sale?

    If an Ontario homeowner has fallen into arrears with monthly mortgage payments, they are in what is called mortgage default. When this occurs, there are mechanisms that Ontario lenders may take to try to recoup losses, bring the mortgage in good standing or initiate the process of taking possession of the property and selling it if the homeowner fails to pay arrears.

    Although there are two widely recognized methods for handling mortgage default, in Ontario it is far more common for lenders to utilize the power of sale. The other method is referred to as foreclosure. 

The main difference between the two methods for dealing with mortgage arrears relates to the use of the court and the time it takes to carry out the process. The power of the sale process is handled by the lender and does not require the permission of the courts. It is also a less timely process. Usually, a power of sale can be completed in under 6 months. Foreclosure requires an application and permission from the court to initiate proceedings and it ends up being a far lengthier process. 

So what exactly is Power of Sale? The best way to describe this term is when one is taking the right to sell the property. The lender has been given the power to sell a home or property. In the event of Power of Sale, the homeowner still owns the home but the lender now has the legal right to sell it.  Any profit made on the sale of the property legally goes back to the property owner. The homeowner will be subject to extremely high fees ranging up to 30,000 dollars in the power of sale proceedings. Although the profit made on the home sale is entitled to the homeowner after the high costs are deducted and all legal fees paid by the lender, there is often very little profit left. Sometimes, the homeowner ends up owing money to the lender if the cost of the sale for the lender outstrips the available profit.

It is for this reason along with the desired option of keeping the home that it is in the best interest of an Ontario homeowner to try to stop any power of sale on their property.

What are the Steps in a Power of Sale?

  1. Allow for 15 days- once a borrower has missed a payment or is substantially late or has broken another mortgage term such as failure to pay insurance on the property, the Ontario Mortgage Act requires that you provide a borrower 15 days to try to rectify the situation before a lender, traditional, or private can exercise the power of sale. 

  1. Send a Notice of Sale to Borrower- After 15 days have passed and the mortgage has not been put in good standing, a lender is now entitled to send a letter to your borrower entitled to notice of sale. The notice of sale letter will specify that the borrower has gone into default and that the borrower has a redemption period to try to rectify the situation by making up any missed payments or met mortgage terms successfully.


  1. Lender Will Issue a Statement of Claim- If the borrower does not pay what is due by the end of the redemption period the lender has the legal right to issue what is called a Statement of Claim to address the debt owning and take possession of the property.

  1. Lender Can Take Possession of the Property- After the Statement of Claim has been issued and the mortgage is still in arrears, the lender is now in the position to take possession of the property and take legal steps to evict by asking the court for a Writ of Possession. The current owners will be asked to evict the property at a specified date. If they do not leave voluntarily, then they may be forcibly removed by the authorities from the property.

  1. Take Steps to Sell the Property- It is only at this final step of the power of sale proceedings that the lender can legally possess the property with an eviction letter and attempt to sell the property in the condition it is currently in.

How to Stop a Power of Sale?


  1. Take out a private second mortgage - In Ontario, there is a broad network of well-established and Sell your property Quickly Before the Process is complete- Some Ontario-based buyers will be able to buy your property in the current state it is in, saving time and money on renovation costs and fix-ups/repairs. Your property can be sold in as little as a week before the power of sale process is experienced private lenders that will be able to negotiate private mortgage loan options despite any credit problems. Rates will generally be between 7% to 10% and fees associated with these private loans tend to be between 3% to 6% of the total loan amount. Any loan that will be negotiated will not exceed 75% LTV, or 75% of the assessed value of your home. Private lenders will assess both the LTV and the existing equity in your home (usually at least 20% equity is preferred) to determine the terms of a private mortgage loan.

  1. Take out a new mortgage to replace the existing mortgage- a private lender will be able to help an Ontario homeowner negotiate the terms of a new private mortgage loan with terms that will allow the homeowner to pay off arrears and manage the monthly mortgage payments. The mortgage loan will have a term length of between 1 to 3 years. This private mortgage financing can help with short-term finances to stabilize and to help restore good credit.

Mortgage Broker Store can Help Stop a Power of Sale on Your Home

    As an Ontario homeowner, it is always advisable to try to take any step necessary to prevent a power of sale on your property. There are different private loan options available using the equity in your home to help pay arrears and put your mortgage in good standing. Any other immediate financial concerns can be addressed as well by taking out a secured private mortgage loan while giving you time to restore your credit.

    Mortgage Broker Store can help connect you with a private lender to discuss your particular financial concerns. We are connected to a large network of well-established private lenders who will be able to advise on the best private mortgage option to enable you to keep possession of your valued home.


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