How Private Mortgages Can Help Stop Power of Sale in Ontario

What Is Power of Sale?

In Ontario, lenders are legally permitted to sell a property without going to court through a process known as power of sale. This is a method used by mortgage lenders to recover money owed when a borrower defaults on their mortgage payments.

Unlike foreclosure, which is a court-supervised process in some provinces, power of sale is faster and more administrative in nature, giving lenders the right to sell the property and recover their funds. Any leftover proceeds are returned to the homeowner, but in most cases, a distressed sale results in less equity returned to the borrower.

For homeowners in Ontario, this process can feel overwhelming. However, a private mortgage can be a practical and fast solution to stopping power of sale before the lender completes the property transaction.

How Homeowners End Up Facing Power of Sale

There are various reasons homeowners find themselves in default, including:

Missed mortgage payments due to job loss or illness
Separation or divorce affecting household income
Property tax arrears
Missed payments on a second mortgage
Ballooning debt and inability to manage monthly obligations
Failure to renew an existing mortgage or refinance on time
Rising interest rates leading to unaffordable variable payments

Once a default occurs, lenders typically issue a Notice of Sale Under Mortgage, giving the borrower approximately 35 days to redeem the mortgage. If no payment or resolution is made during this period, the lender can proceed with selling the property.

Using a Private Mortgage to Stop Power of Sale

A private mortgage is a fast, short-term loan issued by a private lender, usually secured against the property’s equity. It is designed to resolve urgent situations where traditional bank financing is not available or too slow.

How It Works

A private lender assesses the value of your property (not your credit).
They issue a mortgage or second mortgage loan based on your equity.
The funds are used to pay off arrears, legal fees, penalties, and bring the mortgage current.
The power of sale process is halted once the lender or their lawyers receive the funds.
You then have 6–12 months (or more, depending on terms) to stabilize finances, sell the property voluntarily, or refinance with a traditional lender.

This solution works because private lenders prioritize speed and flexibility, often approving and funding loans within 48 to 72 hours.

Key Advantages of Using a Private Mortgage to Prevent Power of Sale

Benefit	Explanation
Rapid Approval	Loans can be funded within days, faster than any bank
No Credit Score Barriers	Approvals based on home equity, not credit history
Flexible Repayment Terms	Interest-only or short-term options available
Prevents Forced Sale	You regain control of your property’s future
Preserves Equity	You avoid the loss typically associated with distressed sales
Allows Time to Refinance or Sell	You’re no longer racing against a sale deadline

Example Scenario

A homeowner in Toronto receives a Notice of Sale from their bank after missing three mortgage payments and falling $25,000 into arrears. The house is worth $850,000, with a remaining first mortgage balance of $500,000.

A private lender offers a second mortgage of $75,000, which covers:

The mortgage arrears and interest
Legal and administrative fees from the lender
Property tax arrears
Broker and lender fees

Within 72 hours of approval, the power of sale is stopped, and the borrower gets 12 months to either refinance or sell the property.

Alternative Options for Homeowners Facing Power of Sale

While a private mortgage is often the fastest and most effective option, other strategies exist:

1. Traditional Mortgage Refinance

Only possible if your credit is still strong and you have time before the sale.
Takes 2–6 weeks and usually not feasible during urgent sale proceedings.

2. Consumer Proposal

Negotiates unsecured debt with creditors, possibly freeing up cash flow.
Does not directly stop the power of sale process unless combined with other strategies.

3. Selling the Home Voluntarily

If you act early, selling your home through a realtor allows you to control the sale and preserve more equity.
Once the lender lists your property under power of sale, the price may be set lower, and you lose negotiating power.

4. Working Out a Payment Plan with Your Lender

This is possible in early stages of default but becomes unlikely after legal action has started.

Consequences of Delaying Action

If you wait too long to act after receiving a Notice of Sale, you may face:

Immediate loss of the home through lender sale
A significant drop in equity due to below-market sale price
Legal fees deducted from the sale, further reducing your return
Damage to your credit score that may take years to repair
Emotional distress from forced eviction and court involvement

Conclusion: Act Now to Stop Power of Sale with a Private Mortgage

Time is the most critical factor in a power of sale situation. The sooner you take action, the more options you will have.

A private mortgage can:

Stop the sale of your home
Protect your financial future
Give you breathing room to make better long-term decisions

If you’ve received a Notice of Sale or are at risk of losing your home in Ontario, reach out to a trusted private mortgage professional immediately.

Need Help Right Now?

If you’re under pressure and unsure where to turn,
Contact the experts at Equity Mainly Matters.
They specialize in emergency private lending, foreclosure prevention, and rescue mortgages for Ontario homeowners.

Frequently Asked Questions (FAQ)

1. What is a power of sale in Ontario?

A power of sale is a legal process that allows a mortgage lender to sell a property when a borrower defaults on their loan. It does not require a court proceeding and is typically faster than foreclosure. After missed payments, the lender can issue a Notice of Sale and begin proceedings to recover the loan balance by selling the home.

2. Can a private mortgage really stop a power of sale?

Yes. A private mortgage can be used to pay off the arrears and legal costs that triggered the power of sale. Once these amounts are settled, the process is halted, and the borrower regains control over the property.

3. How quickly can I get a private mortgage in Ontario?

Most private mortgage approvals can be completed within 2–5 business days, and in urgent cases, within 24–72 hours. Speed depends on your documentation, home equity, and cooperation between lenders and lawyers.

4. Will I lose my home if I do nothing after receiving a Notice of Sale?

Yes, if you do not act, your lender can legally sell your property after the redemption period ends. The longer you wait, the less control you will have over the sale price and proceeds.

5. What credit score is required for a private mortgage?

Private lenders do not typically base approval on your credit score. The primary concern is the loan-to-value ratio (LTV)—in other words, how much equity you have in your home.

6. Are private mortgage rates higher than bank mortgage rates?

Yes. Private mortgage rates are generally between 8% and 14%, depending on your risk profile and property. These loans are short-term, intended to solve urgent problems, not for long-term use.

7. Can I refinance back into a bank mortgage later?

Yes. Many borrowers use a private mortgage as a short-term bridge while they improve their credit, resolve debt, or prepare for traditional refinancing through a bank or B-lender.

8. Will a power of sale hurt my credit?

Yes. Mortgage defaults, missed payments, and legal action will negatively impact your credit report. The sooner you resolve the situation, the more damage you can avoid.

9. What documents do I need to apply for a private mortgage?

You will generally need:

Government-issued ID
Current mortgage statement
Property tax bill
Home insurance
Proof of income (if available)
Property appraisal (or consent to order one)