Reinstating a Mortgage in Default in Ontario: Catching Up Without Paying Off

Falling behind on mortgage payments is frightening, but it does not automatically mean you will lose your home. Ontario law gives most homeowners a powerful tool called reinstatement — the right to cure a mortgage default by paying what you owe in arrears, plus the lender's reasonable enforcement costs, without having to pay off the entire mortgage balance. If you are looking at reinstating a mortgage in default in Ontario, the most important thing to understand is that time is critical: this right has a deadline, and once it passes, your options narrow sharply.

This article explains how reinstatement works, what you must pay, how many times you can use it, and what to do right now if you have received a notice from your lender.

Reinstatement vs. Redemption at a Glance

What "Default" Means in a Power of Sale Context

A default occurs when you breach a term of your mortgage — most commonly by missing payments, but also by failing to maintain insurance, pay property taxes, or comply with other covenants. When a default is not cured within any grace period in the mortgage document, the lender may issue a Notice of Sale (sometimes called a notice under the Mortgages Act). This notice formally starts a countdown that, if you do nothing, ends with the lender selling your property to recover the debt.

The power of sale process in Ontario is generally faster than judicial foreclosure in other provinces. That speed is exactly why acting immediately matters.

Reinstatement: Stopping the Clock by Paying Arrears

What reinstatement actually does

Reinstatement is the act of bringing a mortgage back into good standing by paying everything that is overdue — and nothing more than that. Once a valid reinstatement payment is accepted, the power of sale process stops, the original mortgage continues as if the default had not occurred, and you keep your home with the same rate and amortization you had before.

This is the key distinction from redemption: reinstatement does not require you to pay off your entire mortgage. If you owe $400,000 on your home and you missed six months of payments at $2,200 each, a reinstatement might cost roughly $13,200 in arrears plus accrued interest on those arrears plus the lender's legal and enforcement costs — not $400,000.

What you must actually pay

To complete a valid reinstatement in Ontario you must pay:

• All missed payments (principal and interest) since the date of default
• Interest on the arrears calculated at the mortgage rate (or the default rate if your mortgage specifies one — verify your mortgage document)
• The lender's reasonable enforcement costs — this typically includes their legal fees, any appraisal or property inspection fees, and administrative charges actually incurred up to the point of reinstatement
• Any outstanding property tax or insurance arrears if the lender has advanced these on your behalf

Lenders are not entitled to charge whatever they wish. "Reasonable" enforcement costs can be challenged, and if a lender provides inflated figures you have the right to dispute them.

How to get the exact reinstatement amount

Do not guess. Contact your lender in writing — email or registered mail — and request a formal reinstatement statement (sometimes called an arrears statement or a statement of account). The statement should set out the exact figures as of a specific date and show you how interest accrues daily after that date. Get this in writing. If the lender provides incorrect figures and you rely on them in good faith, Ontario courts have shown willingness to hold lenders to their stated amounts — but you need a paper trail.

The Time Limit: Act Before the Notice of Sale Period Expires

Ontario's Mortgages Act gives lenders the right to proceed to sale after a notice period has run (as of writing — verify the current minimum period, which has been subject to legislative change). Once that period expires and a sale is actively underway, reinstatement is no longer available as of right. You would then need to negotiate directly with the lender or seek a court order, neither of which is guaranteed.

The practical rule: treat the day you receive a Notice of Sale as day one of an emergency. Every day of delay reduces your options and increases the costs you will owe.

How Many Times Can You Reinstate?

Ontario law limits the number of times a borrower can exercise the statutory right to reinstate within a given period (as of writing — verify the current limit under the Mortgages Act, as this has been amended). If you have already reinstated your mortgage and you default again, you may have exhausted your statutory right. In that situation:

• The lender is not obligated to accept a further reinstatement
• You would need to negotiate a forbearance agreement with the lender (a private arrangement outside the statute)
• Courts can sometimes intervene if the lender is acting in bad faith or if the circumstances are exceptional, but this is not a reliable remedy

If you are facing a second or subsequent default, get legal advice immediately — the rules are stricter and the options narrower.

When a Lender Can Refuse Reinstatement

Even within the statutory period, lenders may in limited circumstances argue that reinstatement is not available — for example, if the default is not a payment default but a structural covenant breach. Courts will examine whether the lender's refusal is reasonable. If a lender provides incorrect figures and then refuses the payment you tendered in reliance on those figures, a court may intervene. Document everything.

Reinstatement vs. Refinancing: Which Makes More Sense?

If you have meaningful equity in your home, refinancing with a new lender may actually be simpler than reinstating — particularly if the relationship with your current lender has broken down or if you are facing a second default where reinstatement is not available as of right. A refinance pays out the existing mortgage entirely (redemption) and replaces it with a new loan, often with restructured payments you can manage.

The trade-off: refinancing under distress often means B-lender or private mortgage rates, which are higher. Reinstatement keeps your existing rate. Run the numbers with a lawyer or mortgage professional before choosing.

Practical Steps If You Are in Default Right Now

1. Do not ignore notices. Open every piece of mail and email from your lender or their lawyers.
2. Identify the deadline. Find the Notice of Sale and note the date the notice period expires.
3. Request a reinstatement statement in writing from your lender immediately.
4. Contact a lawyer. A real estate lawyer can review the statement, identify errors, and help you tender a proper reinstatement payment.
5. Document every communication. Keep copies of letters, emails, and records of phone calls (date, time, name of representative).
6. Do not move out. Vacating the property does not protect you and may complicate your position.
7. Explore parallel options. A lawyer can assess whether refinancing, a forbearance agreement, or a sale by you (rather than a lender-forced sale) makes more sense in your circumstances.

Frequently asked questions