Please read: This article is for informational purposes only and does not constitute financial advice. Speak with a licensed mortgage professional before making any mortgage decisions.
Quick Answer
- In Ontario, your lender typically cannot start power of sale until you are at least 15 days in arrears, and once they do, you often have a 35- to 40-day redemption period to catch up or refinance before the property can be sold.
- Acting in the first 30 days of a missed payment gives you the widest range of options; waiting until a Notice of Sale is served narrows them sharply.
- The main rescue paths are a refinance with your current lender, a switch to an alternative (B) lender, a second mortgage to clear the arrears, or a private mortgage as a short-term bridge.
- Each path depends on how much equity you hold, whether your income can be documented, and how recent the missed payments are.
- Whether a bank refinance, a B-lender switch, a second mortgage, or a private rescue is the right fit depends mostly on your equity position, your income documentation, and how many payments you have missed.
“The envelope came yesterday” — what Ontario borrowers are facing
Someone in Scarborough opens a plain white envelope at the kitchen table. It is from their lender. They have been one payment behind, then two, and now there is a letter with legal language they do not fully understand. The house they chose with so much care has become the thing they are afraid of losing.
If that is close to where you are, know this: most files that look terminal from the kitchen table are still fixable. This article answers the three questions every Ontario borrower in arrears is asking — how much time, what options, and am I about to lose my home.
Pick your path — a 60-second decision checklist
Call your lender this week and ask about their hardship program before they call you.
This is almost always a lender-fit problem, not a dead end. Book a 15-minute call with a broker before another payment slips.
The clock is now measured in weeks. Do not avoid your lender, and do not apply at three banks in the same week.
Start 90 days ahead. Compare renewal against refinance before the current term ends.
How power of sale works in Ontario (in plain English)
In Ontario, almost every residential mortgage default is handled under power of sale, not foreclosure. It is a contractual remedy — your lender does not need a court order, only the notice and timing rules in the Mortgages Act, R.S.O. 1990, c. M.40. A typical timeline: a missed payment, a 15-day cure window, collection calls, a formal Notice of Sale under Charge, a 35- to 40-day redemption period, and only then the right for the lender to list.
Time is real but shorter than people assume. Inside the first 30 days, a bank refinance may still be on the table. If a Notice of Sale is already in hand, you are in alternative and private lender territory and the file must move in days. The full legal process from the lender’s side is covered here: how power of sale works in Ontario.
Power of sale vs foreclosure — why it matters in Ontario
Foreclosure is a court process in which the lender asks a judge to take ownership; it is standard in British Columbia, Alberta and Saskatchewan but is used rarely in Ontario. Power of sale is faster for lenders and does not transfer ownership — the lender sells the home and must account to you for any surplus after mortgage, costs and other charges are paid out. See our overview of foreclosure in Canada.
Your four rescue paths — and when each one actually works
Path one — refinance with an A-lender. If you are inside the first missed payment and your income is well documented, your current bank or another A-lender may refinance, roll the arrears into the new balance, and reset the file. The qualifying bar is the OSFI B-20 stress test — the greater of contract rate plus 2% or 5.25% — so this path depends on income strength as much as equity.
Path two — switch to an alternative (B) lender. An alternative or B lender is a federally or provincially regulated lender that approves borrowers outside the big banks’ standard income and credit rules, usually at a higher rate for a shorter term. B-lenders are the natural home for self-employed borrowers, those with credit bruising, and most borrowers more than one or two payments behind. Our refinancing page covers both routes.
Path three — second mortgage to clear the arrears. A second mortgage sits behind your first and gives you a lump sum to pay the arrears and consolidate other debts. It carries a higher rate and set-up costs but keeps the existing first in place and can be arranged in days when there is clear equity. See our second mortgage guide for 2026.
Path four — private mortgage as a short-term bridge. Private funding comes from individual investors or a mortgage investment corporation rather than a bank. It is the fastest-closing option and often the only path once a Notice of Sale is on the file, but it is the most expensive and typically runs six to twelve months with a planned exit back to a B or A lender.
| Path | Typical use | LTV ceiling | Rate range* | Close speed |
|---|---|---|---|---|
A-lender refinance Bank or monoline |
Inside first missed payment, income well documented, bureau clean | ≤ 80% | Lowest | 2–4 weeks |
B-lender switch Alternative |
1–2 payments behind, self-employed, bruised credit, flexible income | ≤ 80% | Mid | 2–3 weeks |
Second mortgage Behind first |
Clear equity, want to keep first in place, buy time to renewal | ≤ 80% | Mid–high | 1–2 weeks |
Private mortgage Short-term bridge |
Notice of Sale served, or no other tier will approve, with planned exit | ≤ 85% | Highest | Days |
If you are more than one payment behind and your bank has gone quiet, that is almost always a lender-fit problem, not a dead end. A 15-minute call with a Toronto broker can show you which lenders would look at your file differently — before another payment is missed and the options narrow.
Book a 15-minute callOr estimate your equity firstThe first 30 days — a step-by-step roadmap
The borrowers who save the most money move in the first month, before the file becomes a legal matter. Here is the shortest honest version, in order.
- 1Call your lender before they call you.One short call keeps the door open and often buys a 30-day grace.
- 2Pull your most recent mortgage statement.You need the balance, renewal date, per-diem interest, and the exact arrears figure in writing.
- 3Estimate your equity.Market value minus everything secured against the home. Our home equity calculator gives a rough number in two minutes.
- 4Gather income documents.Last two years of T1 Generals and Notices of Assessment, two paystubs, and three months of business bank statements if self-employed.
- 5Talk to a broker before a second payment is missed.A broker can test your file against A, B and private lenders without a hard credit check.
- 6Decide between catch-up, refinance, or sale on your terms.Each is still a choice inside this window; many become out of reach once a Notice of Sale is served.
Where this depends on your file
Every arrears file is different, and the four rescue paths do not weigh equally. Four factors do most of the work in deciding which one actually closes.
Razi Khan, Founder and Mortgage Broker at Pegasus, and the Pegasus team see arrears files from Mississauga to Scarborough every week. Most calls on this topic are 15 minutes — long enough to tell you which tier your file sits in. For borrowers whose arrears are tied to credit bruising, our bad credit mortgage solutions page explains the B-lender route. If a Notice of Sale has been served and you want to dispute it in court — improper notice, redemption disputes, or lender conduct — that is a legal matter, and Nihang Law Professional Corporation handles mortgage litigation for Ontario homeowners.
Common mistakes borrowers make in the first 60 days
- Avoiding the lender’s calls. Silence accelerates the file. One short call keeps the door open.
- Applying at three banks in the same week. Each hard credit check lowers the score at the worst time. A broker tests the file before pulling bureau.
- Taking the first private mortgage offered. Lender, broker and legal fees can nearly double the real cost. A private should be short, costed in writing, and have a defined exit.
- Using a HELOC advance to make the mortgage payment. It buys weeks, not a solution, and shrinks the equity needed for a rescue.
- Waiting for the renewal letter. If arrears are on file, a renewal may not come. Testing the market 90 days ahead, and consolidating other high-interest debt into the refinance, changes the outcome.
- Assuming the home must be sold. Many files that look terminal have one viable rescue the borrower cannot see alone.
Frequently asked questions
How many mortgage payments can I miss in Ontario before my lender starts power of sale?
My bank sent me a Notice of Sale — do I really have 35 days to fix this?
Can I still refinance my mortgage if I'm already two months in arrears?
My lender in Mississauga won't talk to me — what do I do now?
Will a second mortgage actually help, or will it just make things worse?
Is a private mortgage safe, or should I avoid it?
If my mortgage is up for renewal and I'm behind, will my bank still renew me?
Can I sell my house in the GTA before the lender does, and would that be smarter?
Behind on your mortgage in the GTA? Talk to a broker this week.
You are not the first homeowner to find yourself here, and you will not be the last. On the first call we will look at where your file actually sits — missed payments, equity, income — and tell you which of the four rescue paths is realistic for you, with no credit check and no obligation.
Book a confidential 15-minute callOr call 416-281-9628 — mention you are in arrears so we can route you to a senior broker.
Disclosure: This article is for informational purposes only and does not constitute financial advice. Speak with a licensed mortgage professional before making any mortgage decisions. Rate ranges and timelines referenced here are illustrative only — not a forecast — and vary by lender and borrower file. Pegasus Mortgage Lending Center Inc. is licensed by the Financial Services Regulatory Authority of Ontario (FSRA Lic # 11479). Our brokerage service is typically free on most residential files; on private rescue files, any broker fee is disclosed in writing before you commit.
About the author
Razi Khan
Founder, CEO & Licensed Mortgage Broker · Pegasus Mortgage Lending · Toronto, Ontario · FSRA Lic # 11479
Razi Khan is the Founder, CEO, and a licensed Mortgage Broker at Pegasus Mortgage Lending Center Inc., based in Toronto. With over 20 years of experience in the Canadian mortgage industry, Razi has personally guided more than 3,000 clients through some of the most complex and high-stakes financial decisions of their lives — from first-time purchases in the GTA to refinancing strategies, alternative lending solutions, and cross-border mortgages for Canadians buying in the United States.
Razi founded Pegasus in October 2008, launching the brokerage at the height of a global financial crisis. He works across the full spectrum of borrower profiles, with particular expertise in complex files including self-employed borrowers, credit-challenged clients, and investors building multi-property portfolios.
Learn more about Razi Khan →Sources & References
- Mortgages Act, R.S.O. 1990, c. M.40 — statutory basis for power of sale in Ontario. ontario.ca/laws/statute/90m40
- Office of the Superintendent of Financial Institutions — Guideline B-20, Residential Mortgage Underwriting Practices and Procedures. osfi-bsif.gc.ca
- Financial Services Regulatory Authority of Ontario (FSRA) — mortgage broker and brokerage licensing, conduct standards. fsrao.ca
- Financial Consumer Agency of Canada (FCAC) — Dealing with financial difficulties. canada.ca/en/financial-consumer-agency
- Canada Mortgage and Housing Corporation (CMHC) — mortgage default and homeowner assistance resources. cmhc-schl.gc.ca
- Equifax Canada / TransUnion Canada — mortgage account reporting codes (R1–R9).