- Under a power of sale mortgage, notice cannot be given until the default has lasted at least 15 days, and a sale cannot happen until at least 35 days after the notice.
- Interest on arrears cannot be charged at a rate higher than the rate payable on principal not in arrears.
- Relief such as deferrals is an agreement with the lender, not a right, so ask early.
Missing a mortgage payment is stressful, but one missed payment does not usually mean you are about to lose your home. There are legal timelines the lender must follow, and there are options worth raising early.
This article walks through what typically happens, which charges can be added, and when enforcement actually begins in Ontario.
The first days after a missed payment
In the first days, the lender will usually contact you and add the missed amount to the arrears. Under a mortgage with a power of sale, the lender cannot give notice of exercising it until the default has continued for at least 15 days. Formal enforcement therefore does not start on the day a payment is missed.
Lenders may also offer help before enforcement. Federally regulated lenders are expected to give tailored relief to borrowers at risk of default on their principal residence, and the borrower's express consent is required. That expectation applies to banks and other federally regulated lenders, and only for an existing residential mortgage on the principal residence, so it does not cover provincially regulated or private lenders.
Default charges and interest
No fine, penalty or rate of interest may be charged on mortgage arrears that increases the charge on the arrears beyond the rate payable on principal not in arrears, and interest on arrears at a rate no higher than the mortgage rate is allowed. Ask for a breakdown of what is being charged.
Private lenders can be different in practice. Private mortgages are generally short term, often interest-only, with fees often higher than for a traditional mortgage, and private lenders may charge fees for late payments, lapsed insurance or property upkeep. Read your own mortgage to see what it allows.
You can give the lender written notice requiring a statement of the arrears and expenses. The lender must answer within 15 days, and if it does not, or answers incompletely or incorrectly, its enforcement rights are suspended until it complies.
When enforcement actually begins
Where the mortgage contains a power of sale, the lender cannot sell until at least 35 days after notice has been given, and that notice must go to every person with an interest in the property. The notice must be in Form 1, Notice of Sale under Mortgage. A notice sent in the manner the statute prescribes is not defective just because the recipient never received it.
| Stage | What the law says |
|---|---|
| Missed payment | Default begins; no notice of sale yet |
| After 15 days of default | Lender may give notice of sale |
| At least 35 days after notice | Earliest the sale can be made |
| No power of sale clause | Statutory power applies after three months' default with 45 days' notice |
After a demand or notice of sale, the lender cannot start further proceedings to enforce until the time in the notice has passed, unless a Superior Court judge permits it. A writ of possession may be issued only with leave of the court.
Ways to catch up or get relief
A borrower in default can stop the lender from enforcing the acceleration clause by paying the arrears and the lender's necessary expenses, even if the agreement says otherwise. That right ends once a power of sale closes.
- A payment deferral is an agreement with the lender, not a right. It usually lasts up to 4 months, interest keeps accruing and is usually added to the principal, and your payments or amortization may increase afterward.
- Relief can include extended amortization, waived prepayment penalties and internal fees, and allowing a missed payment without reporting it to credit bureaus, where the FCAC expectations apply.
- Other options include blend-and-extend, capitalizing missed payments, interest-only payments for a limited time, and a sale-by-borrower plan in which the owner sells at fair market value and can usually stay up to 90 days.
If you share the home with a spouse who is not on title, that spouse has the same right of redemption or relief against forfeiture and is entitled to the same notice.
What to do next
- Call the lender as soon as you know a payment will be missed, and follow up in writing.
- Ask for a written statement of arrears and expenses.
- Keep every letter and notice, with the date you received it.
- Compare the relief options and ask what each does to the balance.
- Do not ignore a notice of sale; the dates in it matter.
- Get legal advice before signing any new agreement or the sale of the home.
Frequently asked questions
Will the lender start a sale after one missed payment?
Not right away. Under a power of sale mortgage, notice cannot be given until the default has continued for at least 15 days, and a sale cannot happen until at least 35 days after notice. Your mortgage terms and the facts still matter.
Can the lender charge extra interest on my arrears?
Interest on arrears at a rate no higher than the mortgage rate is allowed, but a charge that increases the cost of the arrears beyond the rate on principal not in arrears is not. Private lenders may also charge certain fees if the mortgage allows them.
Is a payment deferral guaranteed?
No. A deferral is an agreement with the lender, not a right, and interest usually keeps accruing and is added to the principal. Federally regulated lenders are expected to offer tailored relief for a principal residence, but that does not cover every lender.
Can the lender take possession of my home right away?
A writ of possession may be issued only with leave of the court. A lender's possession could not be lawful until after the notice of sale period expired, but unless the mortgage requires notice, a lender does not have to give notice before taking possession once it is otherwise entitled. Get advice quickly if this happens.
Sources
- Ontario.ca – Power of sale assignments (policy) — ontario.ca
- CanLII – Mortgages Act, R.S.O. 1990, c. M.40 — canlii.org
- Ontario Court Forms – Mortgage Act Forms — ontariocourtforms.on.ca
- Court of Appeal for Ontario – Martin v. 11037315 Canada Inc., 2022 ONCA 322 — ontariocourts.ca
- Court of Appeal for Ontario – Hume v. 11534599 Canada Corp., 2022 ONCA 575 — ontariocourts.ca
- Court of Appeal for Ontario – Sheth v. Randhawa, 2022 ONCA 89 — ontariocourts.ca
- Court of Appeal for Ontario – 2544176 Ontario Inc. v. 2394762 Ontario Inc., 2022 ONCA 529 — ontariocourts.ca
- CanLII – Family Law Act, R.S.O. 1990, c. F.3 — canlii.org
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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