Fell behind on your Ontario mortgage? What the law says happens next, and what a proposal does not change

Canadian Mortgage Trends, reporting on the fall industry report from the Canada Mortgage and Housing Corporation (CMHC), put Ontario’s mortgage arrears rate at 0.32% for the second quarter of 2026, against 0.21% twelve months before. The agency expects Ontario to see the largest and most sustained rise through mid-2027.¹ The rate is still low, but for a household that has missed a payment, the percentage is beside the point. The practical question is what comes next. This article sets out the general rules in Ontario. It is information, not legal advice, and your own mortgage terms matter.

What counts as default?

The Financial Consumer Agency of Canada (FCAC) says default happens when you do not follow the terms of your mortgage agreement, such as missing a regular payment. The lender then has the legal right to recover what you owe, which may eventually lead to a forced sale of the home.² Default usually begins long before that point, and the FCAC expects banks it regulates to watch for early signs and to contact borrowers at risk.

How does a power of sale work in Ontario?

A lender whose mortgage includes a power of sale can sell the property if you stay in default. The Mortgages Act sets minimum waiting periods for that process. Where a mortgage gives the lender a power of sale on default, section 32 says notice cannot be given until the default has lasted at least 15 days, and the sale cannot take place for at least 35 days after the notice.³ The Act also contains other provisions, including one that refers to 45 days’ notice, so which timeline applies depends on the mortgage and how it was drafted. A real estate lawyer can read yours.

Lenders can also choose other enforcement routes, and the rules differ in other provinces. Do not assume the Ontario timeline applies elsewhere.

Can I stop it by catching up?

In many cases, yes, if you can pay what is owed. Section 22 of the Act says that when a default has made the whole mortgage due, the borrower can still pay the amount due, leaving out money that is not payable merely because time has passed, and cover the lender’s necessary expenses. This can be done at any time before a sale or before an enforcement action begins, and the borrower is then “relieved from the consequences of such default.”³ You can also ask in writing for a statement of the arrears and expenses, and the lender must answer within 15 days. A lender that does not answer without reasonable excuse may have its enforcement rights suspended until it does.³

That route needs a lump sum, which is the difficulty for many households. It is also why timing matters, because interest and the lender’s expenses can grow the longer a default continues.

What can a proposal or bankruptcy do about a mortgage?

This is where people are often surprised. When you file a consumer proposal or bankruptcy, a stay of proceedings stops most collection of unsecured debts included in the filing, such as credit cards and lines of credit. The Office of the Superintendent of Bankruptcy (OSB) says that, as a rule, the stay does not reach a lender’s efforts to collect secured debts, with a mortgage and a car loan given as examples.⁴ A consumer proposal, then, is not a way to stop a lender from enforcing a mortgage that is in default.

What it can do is deal with the unsecured debts that take cash from your budget, which may free money for the mortgage. A Division I proposal is a different process that can be made to secured creditors as well, but it requires their agreement in each class and it is more involved.⁵ The right option depends on your debts, your income and the equity in your home, and each carries trade-offs, including effects on your credit record. A Licensed Insolvency Trustee can explain how these options would apply to you. The OSB notes that trustees typically do not charge for a first consultation.⁶

What this means for you

• Call your lender before you miss a payment if you can. The FCAC says relief measures can include waived fees or a longer amortization, though extending your amortization can add thousands of dollars in interest.²
• Keep every notice. Dates on a notice of sale start the clock.
• Get legal advice early if a notice arrives. A lawyer can check whether the lender followed the Act.
• Look at the whole picture. Harris & Partners describes options when mortgage payments start to slip, and our Ontario debt help guide covers provincial rules. For the numbers behind this week’s reports, see our look at mortgage arrears and the long view.