When you take out a mortgage to finance a home purchase, you're making a promise to your lender that you'll make regular payments until the full loan amount is repaid. But what happens if you fail to make those payments? Unfortunately, multiple missed mortgage payments can result in foreclosure, which would force you out of your home.
Like any debt that gets out of hand, it's easier to deal with early, and the right debt relief options can free up room for your mortgage. Let's learn more about foreclosure on homes in Canada, how the process works in your province, and how to avoid it.
Key Points
- Foreclosure is when your lender takes back your home through the courts after you stop making your mortgage payments.
- Lenders usually start the foreclosure process in Canada after homeowners miss a string of mortgage payments, typically around 3 months' worth.
- Foreclosures are more common in BC, Alberta, Saskatchewan, Quebec, Nova Scotia, and the territories, while Ontario, Manitoba, New Brunswick, PEI, and Newfoundland and Labrador mostly use power of sale.
- You can often stop the process by paying what you owe before your home is sold, and a missed-payment record can stay on your credit report for up to 6 years.
- If you haven't yet missed a mortgage payment but are at risk of doing so, you may be able to avoid foreclosure by speaking with your lender or selling your home.
How Does Foreclosure On Homes Work In Canada?
When you take out a mortgage on your home, your lender will put a lien on the title, which entitles them to repossess the property if you are unable to repay the loan you took out to finance it.
If you fail to make your mortgage payments, the lender you took out your mortgage with can take back the property against your will. This is known as a foreclosure.
In short, a foreclosure on homes in Canada usually works like this: you fall behind on your payments, your lender files a claim in court, the court gives you a set amount of time (a redemption period) to catch up or pay off the mortgage, and if you can't, the court either transfers the home to the lender or orders it to be sold. In some provinces, lenders use a faster process called power of sale instead, which we cover below.
Mortgage arrears are still rare in Canada, but they have been rising. According to the Canadian Bankers Association, 0.29% of residential mortgages held by its member banks were 3 or more months behind in July 2026.1
Foreclosure vs. Power Of Sale: What's The Difference?
The primary difference between a power of sale and foreclosure is that the former does not require the use of the court system. That's why the process is much faster and can be completed within a few months.
On the other hand, foreclosure can be a painfully long process that often doesn't see any sign of resolution until months later, sometimes as long as a year or more.
The other big difference comes down to ownership. In a foreclosure, the court can transfer ownership of the home to the lender, who then tries to sell it to cover the loan balance. In a power of sale, you stay the registered owner until the home is sold, but the lender takes possession and sells it on the open market to pay off what you owe. Any money left over after the mortgage and costs are paid goes back to you.
| Foreclosure | Power Of Sale | |
|---|---|---|
| Where It's Used | BC, Alberta, Saskatchewan, Quebec, Nova Scotia, and the territories | Ontario, Manitoba, New Brunswick, PEI, and Newfoundland and Labrador |
| Court Involvement | Yes, the lender must go through the courts | No court order is needed to sell the home |
| Who Sells The Home | The court orders a sale, or transfers the home to the lender | The lender, under the terms of your mortgage |
| Leftover Equity | Paid to you after a court-ordered sale, but lost if the court transfers the home to the lender | Paid to you after the mortgage and costs are covered |
| Typical Timeline | Several months to over a year | A few months |
Foreclosure And Power Of Sale Rules By Province
Foreclosures differ by province and territory. Here's which process lenders generally use where you live.
| Province Or Territory | Main Process |
|---|---|
| British Columbia | Foreclosure (court-ordered sale) |
| Alberta | Foreclosure (court-ordered sale) |
| Saskatchewan | Foreclosure (court-ordered sale) |
| Manitoba | Power of sale through the Land Titles Office, usually without going to court |
| Quebec | Hypothecary recourses, such as sale under judicial authority or taking the home in payment |
| Nova Scotia | Foreclosure and sale through the courts |
| Ontario | Power of sale |
| New Brunswick | Power of sale |
| Prince Edward Island | Power of sale |
| Newfoundland and Labrador | Power of sale |
| Yukon, NWT, and Nunavut | Foreclosure (court-ordered sale) |
How Many Missed Mortgage Payments Before Foreclosure In Canada?
Being late or missing one mortgage payment won't trigger a foreclosure. Generally speaking, you'd need to miss a few payments, usually around 3 months' worth, before the lender would start one. Foreclosure is also an expensive process for both the lender and borrower, so most lenders will reach out to you to find a different solution before foreclosure.
Similarly, most lenders will not start a foreclosure process until you've broken the mortgage contract and failed to connect with the lender to make alternative payment arrangements. The one exception to watch for is Ontario, where a lender can legally send a notice of sale once a payment is 15 days late, though most wait longer.
What Should You Do If You Missed A Mortgage Payment?
As a homeowner, your best course of action is to contact your lender immediately after missing even one mortgage payment to explain the reason for the missed payment. Your lender will be more willing to work with you to rectify the situation that way. They may help you get your payment schedule back on track, rather than going through the foreclosure process.
Suppose the missed payments are simply the result of temporary financial problems. In that case, you might be able to avoid foreclosure and ask for specific concessions to be made on your mortgage payment schedule.
The Foreclosure Process In Canada, Step By Step
Generally, foreclosures are more common in British Columbia, Alberta, Saskatchewan, Quebec, Nova Scotia, and the territories. The exact steps and deadlines vary by province, but this is what you can expect if your lender starts the process of foreclosure:
The court can end the process in one of two ways:
- Order Of Foreclosure: If the court has reason to believe that you don't have the funds, it can go straight to issuing an Order of Foreclosure, sometimes with a much shorter redemption period. Here, the property will be transferred to the lender directly, and you lose any equity you had in the home.
- Order Of Sale: The court may also decide on an Order of Sale instead, which involves a sale of the home under the court's control. You'll then need to vacate the home by the date the court sets, and once the mortgage and costs are paid, any money left over goes to you.
If you ever find yourself in this situation, it's always best to speak with your lender before the process of foreclosure begins.
Live In Alberta Or Saskatchewan? Check What Type Of Mortgage You Have
In Alberta, if you have a conventional mortgage (a down payment of 20% or more) as an individual, your lender's claim is generally limited to the home itself, so they usually can't sue you for any shortfall after a foreclosure. That protection doesn't apply to high-ratio mortgages that are insured against default, or to mortgages given by a corporation.2
Saskatchewan has a similar rule for a mortgage you used to buy your home, which generally limits the lender to the home itself. It may not cover money you borrowed later, such as a refinance, so ask a lawyer how it applies to your mortgage.
How Does The Power Of Sale Process Work?
In Ontario, Manitoba, PEI, New Brunswick, and Newfoundland and Labrador, a power of sale is the more common and preferred process over foreclosure, and it requires less legal involvement. A power of sale still gives you a chance to keep your home, though it will cost you, since you'll need to pay what you owe plus your lender's costs before the home is sold.
Each province has its own specific power of sale process. Here's how it works in Ontario:
If the home is sold for more than what you still owe on your mortgage, you'll receive the balance. But if the home sells for less than what you still owe, the lender may sue you for the difference.
How Long Does The Foreclosure Process Take?
Foreclosures can be very lengthy, which is one reason why lenders try to avoid them as much as possible. That said, there is no specific time frame for foreclosures. They can take a few months to complete, to over a year.
Multiple factors may be involved in the process that will determine how long individual foreclosures will take, such as the following:
- The home's value or lender assessment
- The equity in the home
- The length of the redemption period the court sets
- The current economic climate
- The current real estate market
- The number of properties currently in foreclosure
Having said that, foreclosures take much longer to complete than the power of sale process, generally speaking.
Can You Stop A Foreclosure In Canada?
Lenders will initiate the foreclosure process when you've missed a series of mortgage payments. As mentioned, you'll receive a copy of the statement of claim that your lender will file with the court. If you reply in time, the court may allow you to bring your mortgage back to good standing by making up for the amount owed (including all penalty charges) to avoid foreclosure.
However, if you don't come up with the money that you owe your lender, the foreclosure process will continue. The lender will place the home for sale to try and recoup any losses. That said, you may still be able to stop the foreclosure even after the home has been listed for sale if you can come up with the outstanding balance owed, as long as you do so before the property is sold. In Ontario, for example, you have the right to pay the arrears and your lender's costs at any time before the sale to put your mortgage back in good standing.3
Warning: Don't Ignore Court Papers
If you don't respond to a statement of claim or notice of sale before the deadline, you may lose the right to defend your case, and the lender can move ahead without hearing from you. Even if you can't pay right away, responding keeps your options open.
Do Foreclosures Affect Credit Scores?
Since foreclosures are reported to the credit bureaus, they can negatively affect your credit score. The missed payments leading up to a foreclosure are reported too, and information about late or unpaid loans can stay on your credit report for up to 6 years.4 If the lender gets a court judgment against you for money you still owe, that judgment is usually kept on your report for 6 years as well, or longer in some provinces.4
That means it can take years before your credit score is no longer affected by your foreclosure, which can make it harder to qualify for a new mortgage, a loan, or even a rental.
Red Flags That You May Be Heading Toward Foreclosure
Spotting the warning signs early can make a difference when it comes to avoiding foreclosure. Here are some key red flags that may indicate you're heading down that path:
- Missed Or Late Mortgage Payments: Falling behind on your mortgage payments is often the first sign of trouble. Lenders usually start taking steps toward foreclosure after about 3 months of missed payments, though in Ontario the process can start sooner.
- Notices From Your Lender: Getting letters or emails from your lender about your missed payments, or threats of legal action, are tell-tale signs that the lender may be leaning towards starting the foreclosure process.
- Using Credit Cards For Essentials: Relying on your credit card to cover basic necessities, like groceries, utilities, or mortgage payments, can be a sign of financial strain.
- Spending Most Of Your Income On Housing: If your mortgage, property taxes, and utilities eat up so much of your paycheque that there's little left for anything else, you may be house poor, which leaves no cushion if your income drops or your payment goes up at renewal.
- Declining Credit Score: Missed payments and increased debt can have a negative effect on your credit score.
- Depleting Savings: Using all your savings or retirement funds to cover mortgage payments may be a short-term fix, but it can lead to long-term financial instability.
- Being "Underwater" On Your Mortgage: If the value of your home drops below your mortgage balance, you'll have negative equity. Being underwater on your mortgage makes selling or refinancing difficult and can increase the risk of foreclosure.
How To Avoid Foreclosure
Even if you're having financial troubles that are making it difficult for you to keep up with your mortgage payments, it's important to do whatever you can to avoid foreclosure. Consider the following to prevent yourself from losing your home.
Speak To Your Lender
The first thing you should do is set up a chat with your lender to discuss the financial issues you're having. As mentioned, you may be able to come up with a slightly different plan that will ease your financial woes.
If possible, speak with your lender before you miss your first payment if you think you won't be able to make it. Ask them if there's anything that can be done to rectify the situation. Your lender may allow you to extend your amortization, which would help lower your monthly payments.
If you do miss a few payments, don't ignore any communications that come from your lender, as this can start the foreclosure process. And if you wait too long, you may be too late to stop the process in its tracks.
Bring Your Mortgage Back To Good Standing
If you're able to gather enough money, you may be able to put it towards your mortgage to bring it back to good standing. Essentially, you'd be reinstating your mortgage by paying the total amount owing, including late fees.
However, this may require a significant amount of money to stop the foreclosure process, which may be difficult given the position you've already found yourself in due to missed payments.
Defer Your Mortgage Payments
Before you miss your first payment, approach your lender and ask if there's any way to defer your mortgage payments. This involves temporarily pausing your payments to give you some time to improve your finances before payments resume once again.
If your mortgage is with a bank or another federally regulated lender, the Financial Consumer Agency of Canada expects them to offer tailored help when you're in serious financial difficulty with the mortgage on your home. That can include extending your amortization for the shortest time needed, waiving prepayment penalties and internal fees, and not charging interest on interest.5
Keep in mind that deferred payments are not cancelled and will eventually need to be covered. Plus, the interest will continue to accrue during the deferral period, so you could wind up paying more overall.
Refinance Your Mortgage
A refinance involves taking out a new mortgage and using the funds to pay off your existing mortgage. Homeowners often refinance to take advantage of lower interest rates or change the amortization period. In your case, you may be able to use a mortgage refinance to extend your amortization period to lower your mortgage payments and make them more affordable for you.
If high-interest debt is what's squeezing your budget, you may also be able to use your home equity to pay off debt and lower your total monthly payments. Just keep in mind that this adds to the debt secured by your home, so it only helps if you can comfortably keep up with the new payment.
Sell Your Home
If you haven't yet missed a mortgage payment but believe you likely will based on your current finances, consider selling your home before you find yourself a few months in mortgage arrears. It may not be a pleasant thing to do, but at least you'll be able to collect the proceeds of the sale and retain your home equity while avoiding a bad stamp on your credit report. But this option works best before you start racking up missed payments.
Talk To A Credit Counsellor
If your mortgage is only one of several bills you're struggling with, a non-profit credit counsellor can go over your budget with you and help you figure out what you can realistically afford. Choosing the best credit counselling service for your situation can also give you access to a debt management plan, which may lower the payments on your other debts so you have more left over for your mortgage.
File A Consumer Proposal
If you're having trouble covering your mortgage payments because of high debt, perhaps filing a consumer proposal may help. While a consumer proposal won't stop foreclosure, it can help you deal with your current debt and free up some much-needed cash to put towards your mortgage payments.
A consumer proposal is an agreement between you and your creditors to settle your debts. Your Licensed Insolvency Trustee will renegotiate what you owe and come up with an arrangement whereby you repay a portion of your outstanding debt based on what you can afford.
Consider Bankruptcy
While not an attractive option, bankruptcy could help you avoid foreclosure, even temporarily. Bankruptcy won't legally stop foreclosure since it doesn't deal with secured debt, which is what a mortgage is.
But, bankruptcy may help you deal with any other debt issues you may have and improve your cash flow so you'll have just enough money available to catch up on your mortgage payments.
It should be noted that bankruptcy doesn't necessarily mean you'll lose your home, which is a common misconception about the process. While that certainly may be the case in many circumstances, it doesn't always happen.
As long as you remain up-to-date on your mortgage payments, bankruptcy laws in Canada will protect you. More specifically, mortgage holders cannot cancel your mortgage as a result of you filing for bankruptcy.
Alternatives To Foreclosure In Canada
If you're facing financial hardship and can't keep up with your mortgage payments, there are alternatives that may be available. Two key options are deed in lieu of foreclosure and short sales, both of which can be less damaging than foreclosure.
Deed In Lieu Of Foreclosure
A deed in lieu of foreclosure lets a homeowner voluntarily hand over ownership of their home to the lender to avoid foreclosure. It helps settle mortgage debt without having to go through court, which can be less damaging to your credit score than a full foreclosure.
For this to work, the lender must agree to the arrangement, and the home must be free of other liens or legal issues. It's typically used as a last resort if selling your home or refinancing isn't possible.
Short Sale
A short sale is when a homeowner sells their home for less than what they still owe, usually because of financial hardship. Again, it may be used to avoid foreclosure and may have a smaller impact on your credit score than a forced sale.
The lender must approve the sale and agree to accept the lower amount as full repayment. You'll also need to show proof of hardship, like job loss or medical bills, to qualify. Get that agreement in writing, since without it, the lender may still be able to come after you for the shortfall.
Final Thoughts
The best way to avoid foreclosure on your home is to make sure you keep up with your mortgage payments. And if you can't, you may want to get in touch with your lender to make alternate arrangements. Otherwise, you may want to speak with a real estate lawyer or Licensed Insolvency Trustee to help minimize the damage caused to your financial and credit health.
Foreclosures In Canada FAQs
What happens if my bank is trying to foreclose my rental property?
Can I sell my property if I find out my bank is trying to foreclose my home?
When should you use a Licensed Insolvency Trustee?
Where can I find foreclosed homes for sale?
Is foreclosure the same across all provinces?
How many missed payments trigger foreclosure?
Can I stop foreclosure once it starts?
What happens if I ignore foreclosure notices?
Can the lender sue me if my home sells for less than I owe?
Do I need a lawyer during foreclosure?
Sources
- Canadian Bankers Association. (2026, September 25). Mortgages in arrears in Canada. https://cba.ca/article/mortgages-in-arrears
- Government of Alberta. (2000). Law of Property Act, RSA 2000, c L-7, ss. 40 and 43. https://kings-printer.alberta.ca/documents/Acts/L07.pdf
- Government of Ontario. (1990). Mortgages Act, R.S.O. 1990, c. M.40, ss. 22, 32 and 47. https://www.ontario.ca/laws/statute/90m40
- Financial Consumer Agency of Canada. (n.d.). How long information stays on your credit report. https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/information-credit-report.html
- Financial Consumer Agency of Canada. (2023). Guideline on existing consumer mortgage loans in exceptional circumstances. https://www.canada.ca/en/financial-consumer-agency/services/industry/commissioner-guidance/mortgage-loans-exceptional-circumstances.html
