The Borrower's Right to Redeem a Mortgage in Ontario

Falling behind on mortgage payments is stressful — but in Ontario, receiving a Notice of Sale does not mean the game is over. The law gives you a meaningful window to exercise your right to redeem mortgage Ontario rules protect, paying off what you owe and keeping your home. That right exists at both common law and under provincial statute, and it continues right up until the lender actually completes the sale.

Understanding redemption matters because the window closes permanently once a power of sale transaction closes. At that point ownership passes to a new buyer and there is nothing a court can do to unwind it. Acting early — ideally the day you receive a Notice of Sale — gives you the most options and the most negotiating room.

This article explains what the right to redeem means in practice, who holds it, how the timeline works, what you will need to pay, and what to do if the lender disputes the amount.

What Is the Equity of Redemption?

The equity of redemption is the common law right of a borrower to pay off a mortgage and reclaim full, unencumbered ownership of the property. Historically, courts of equity refused to allow lenders to strip a borrower of property simply because a payment deadline passed — as long as the debt could be made whole, the borrower could recover the land.

Ontario's Mortgages Act gives this common law concept a statutory backbone. Under that legislation, once a lender issues a Notice of Sale under a power of sale clause, a mandatory redemption period is triggered — a prescribed window during which the borrower (and others with an interest in the property) can pay the full amount owing and stop the sale. As of writing, that period is 35 days from service of the Notice of Sale, but you should verify the current figure with a lawyer because statutory timelines can change.

Who Can Redeem?

The right to redeem is not limited to the borrower whose name appears on the mortgage. Anyone with a legal or equitable interest in the property may exercise it.

Who Can Redeem — Quick Reference

• The borrower — the registered owner who granted the mortgage
• A guarantor — someone who guaranteed the mortgage debt
• A junior mortgagee — a second or third mortgage lender whose security would be wiped out by the power of sale
• A spouse or common-law partner with possessory rights under family law
• A beneficiary or estate trustee where the property is part of an estate
• Any other person with a registered interest (e.g., a judgment creditor whose writ is registered on title)

If you are a junior lender or a family member with rights in the property, do not assume redemption is someone else's problem — your interest disappears when the sale completes.

The Redemption Timeline

Understanding when the clock starts — and when it stops — is critical.

Step 1 — Default. The borrower misses one or more payments (or breaches another mortgage covenant). The lender is not yet entitled to sell.

Step 2 — Notice of Sale is served. The lender serves a formal Notice of Sale under power of sale. This document starts the statutory redemption period running. As of writing, the period is 35 days from service — verify this with counsel, as it is subject to legislative change.

Step 3 — The redemption period runs. During this window the lender cannot take any further steps to complete the sale. The borrower (or any other interested party) can pay out the mortgage in full and stop the process entirely.

Step 4 — Redemption period expires. If no one redeems, the lender may list and sell the property. However, the right to redeem does not immediately vanish — courts retain an equitable jurisdiction to allow redemption even after the notice period expires, as long as the sale has not actually closed. This relief is discretionary and courts will consider whether the borrower acted reasonably and in good faith.

Step 5 — Power of sale completes. The lender closes a sale to a third-party purchaser. At this moment the equity of redemption is extinguished entirely. The right to redeem cannot be exercised after closing.

The takeaway: the sooner you act, the better your position. Waiting until after the notice period expires forces you to seek court discretion, which costs time and money and is never guaranteed.

How Much Do You Need to Pay?

To redeem the mortgage you must pay the full amount required to discharge it — not just the arrears. The redemption amount typically includes:

• Outstanding principal balance — the remaining capital on the loan
• Accrued interest — all interest that has accumulated to the date of redemption
• Mortgage arrears — missed payments including any applicable compounding
• Lender's reasonable enforcement costs — legal fees, appraisal costs, and related disbursements the lender has actually incurred in exercising the power of sale, to the extent permitted by the mortgage and the Mortgages Act
• Prepayment charges — if the mortgage contains a prepayment penalty clause that applies on discharge outside of a renewal date, those charges may form part of the redemption figure (review your mortgage terms carefully)
• Property tax or insurance advances — if the lender has paid these on your behalf to protect its security, you must reimburse them

Getting the Redemption Figure

Contact the lender or their solicitor in writing and request a formal mortgage discharge statement (sometimes called a payout statement). Ask for the amount as of a specific date — usually 10 to 15 business days out to give you time to arrange funds. The statement should itemize principal, interest, enforcement costs, and any other charges.

If the lender refuses to provide a discharge statement, charges amounts you believe are excessive, or inflates enforcement costs beyond what is reasonable, you may need to challenge the figure. A lawyer can write to the lender's counsel or bring a court application to have the redemption amount assessed.

Common Obstacles to Redemption

Dispute over the redemption amount. Lenders sometimes claim enforcement costs that are unreasonable or not permitted under the mortgage. You are entitled to have these costs reviewed. Do not simply accept a number that seems inflated — get legal advice before paying.

Lender moves quickly after the notice period. If the 35-day window passes and you have not redeemed, the lender may list immediately. Courts can still grant relief, but you must move fast and show the court you have funds available or a firm plan to obtain them.

Funds are not yet in place. Arranging a refinancing or a private lender to fund the redemption takes time. Start the process the moment you receive a Notice of Sale — do not wait until the last week of the redemption period.

Redemption vs. Foreclosure

Ontario lenders most commonly use power of sale, not foreclosure. The distinction matters for your right to redeem.

In a power of sale, the lender sells the property and must account to you for any surplus proceeds above what you owed. Your right to redeem survives until the sale closes.

In a foreclosure proceeding, the court extinguishes the equity of redemption by court order, effectively transferring ownership to the lender. Foreclosure is rare in Ontario for residential mortgages but does occur in commercial contexts. Once a foreclosure order absolute is granted, the right to redeem is gone — there are no surplus proceeds and no recovery.

If you are served with a Statement of Claim in foreclosure rather than a Notice of Sale, get legal advice immediately, as the procedural steps and deadlines are different.

Frequently asked questions