What Happens If You Miss Mortgage Payments in Ontario?

Missing a mortgage payment is stressful, and the fear of what comes next can make it tempting to avoid the problem entirely. But if you miss mortgage payments in Ontario, ignoring the situation is the one thing guaranteed to make it worse. The process from a first missed payment to a forced sale of your home takes time — and at almost every stage, you have options.

This article walks you through each stage of what happens, what your lender is likely to do, and what you can do at each point to protect your home and minimize the damage.

Stage 1: One Missed Payment

The day after a missed payment, your bank will typically attempt to withdraw the funds again. If your account lacks funds, you will be charged a non-sufficient funds (NSF) fee by your bank — often between $45 and $65 (as of writing — verify current amounts with your institution). Your lender will also record the missed payment and report it to Canada's credit bureaus.

A single missed mortgage payment can drop your credit score noticeably — the exact impact depends on your credit history, but mortgage accounts carry significant weight. Your lender will usually make contact by phone, email, or letter within a few days.

What you can do: Call your lender before they call you. Explain the situation honestly. Most federally regulated lenders (the big banks — TD, RBC, Scotiabank, BMO, CIBC, and similar institutions) are guided by federal expectations around mortgage hardship and are more likely to offer short-term solutions if you reach out proactively. These expectations are not the same as a legal right to a deferral, but they do give you real leverage early on.

Stage 2: Two to Three Missed Payments — Mortgage Arrears

At this stage, your file moves from a billing issue to a collections issue. Your lender's internal collections or loss mitigation department will take over. Arrears (the total overdue amount, including fees) begin to compound, and pressure increases.

This is also when your lender may reference the acceleration clause in your mortgage contract. An acceleration clause gives your lender the right to declare the entire outstanding mortgage balance due immediately — not just the missed payments. If triggered, you would technically owe the full remaining principal, not just what you are behind on. Lenders rarely invoke this immediately, but the contract language gives them the ability to do so.

Your credit profile takes a second hit with each missed cycle. Two or three missed payments will signal serious distress to future lenders and may affect your ability to refinance or obtain new credit.

What you can do: Ask your lender in writing about a payment deferral or a mortgage modification (temporary or permanent changes to your payment terms). Private lenders — those not subject to federal regulation — move faster and are less likely to offer flexibility, so if your mortgage is held by a private lender, legal advice sooner is better.

Stage 3: Formal Demand / Default Letter

After several missed payments, your lender will issue a formal demand letter (sometimes called a notice of default). This is a written notice stating that you are in default of your mortgage agreement and that the lender intends to take steps to recover the debt. It may specify the exact amount required to bring the mortgage current (called curing the default) and a deadline to do so.

What you can do: This is an important legal document. Read it carefully and keep a copy. If you have not already consulted a lawyer, now is the time to do so.

Stage 4: Notice of Sale — The Power of Sale Process Begins

If the default is not cured, your lender can initiate a power of sale under Ontario's Mortgages Act. The lender registers a Notice of Sale on title to your property. This notice formally signals that the lender intends to sell the property to recover the money owed.

The Notice of Sale triggers a statutory redemption period — the period during which you (the homeowner) can pay off the full amount owing and keep your home.

Stage 5: The Redemption Period

As of writing — verify current timelines — the redemption period under Ontario's Mortgages Act is typically 35 days from the date the Notice of Sale is served on the homeowner (longer periods may apply depending on the type of property and how the notice is served — confirm with a lawyer). During this window, you have the legal right to redeem your mortgage by paying all arrears, fees, and the lender's legal costs.

This is not the time to wait. If you believe you can refinance, sell voluntarily, or make a lump-sum payment, these options must be pursued during the redemption period.

Stage 6: Property Listed for Sale

If the redemption period expires without payment, the lender has the right to list and sell your property. You can no longer stop the sale simply by catching up on missed payments — the full balance may be required, and the lender controls the process. You will typically receive notice to vacate.

The lender is required by law to take reasonable steps to sell the property at fair market value — they cannot simply dump it at a low price. But you no longer have any say in the sale price, timing, or who buys the home.

Stage 7: Sale Completes — Surplus or Deficiency

Once the property sells, the proceeds are applied in order: sale costs, the lender's legal fees, and then the mortgage balance. If there is money left over (a surplus), you are entitled to receive it. If the sale does not cover the full amount owed (a deficiency), you may still owe the lender the difference — and they can pursue you for it.

What You Can Do Right Now

If you have missed a payment or think you might miss one soon, here is a practical action list:

1. Contact your lender immediately — before the next missed payment if possible. Ask about deferral or modification options in writing.
2. Read your mortgage agreement — locate the default and acceleration clauses so you understand exactly what triggers them.
3. Get your numbers straight — calculate what you owe in arrears, fees, and remaining principal. Know what it would take to cure the default.
4. Explore refinancing early — a clean refinance is far easier before your credit is significantly damaged. Even one or two missed payments shrinks your options.
5. Consider a voluntary sale — if keeping the home is genuinely not feasible, selling on your own terms gives you control over timing and price; power of sale does not.
6. Speak with a lawyer — especially before signing anything your lender sends you, before the redemption period expires, or if your lender is private rather than a regulated bank.

Do not wait and hope. The one thing that makes every stage of this process harder is delay. Lenders have more flexibility before a formal default process is underway; lawyers have more options before the redemption period expires; and you have more control before a power of sale is completed.

Frequently asked questions