What Happens If You Miss a Mortgage Payment in Canada

Life is unpredictable. A sudden job loss, an unexpected illness, a business downturn, or a family emergency can happen to anyone, disrupting even the most carefully planned household budget. When this happens, the fear surrounding your single largest expense—your mortgage payment—can be overwhelming.

What actually happens if you miss a mortgage payment? The mind often jumps to the worst-case scenario of immediate eviction and losing your home. While a missed payment is a very serious financial event, it's crucial to understand that it triggers a clear and defined process. It is not an instant catastrophe.

This guide will provide a calm, step-by-step explanation of the entire process, from the first day a payment is missed to the final legal actions a lender can take. Most importantly, we will explain the powerful solutions that are available to help you stop the process, save your home, and get back on track.

The First Few Days: The Initial Impact

The consequences of a missed payment begin almost immediately, though they are administrative rather than catastrophic at this early stage.

Your Bank Account and the NSF Fee

Your mortgage payment is typically withdrawn automatically from your chequing account. If the funds are not available on the scheduled date, your bank will charge you a Non-Sufficient Funds (NSF) fee, which can range from $25 to $50. Your mortgage lender may also charge a separate fee for the failed payment attempt.

The Lender's First Contact

Within a few days of the missed payment, you will receive a phone call or an email from your lender's collections or customer service department. This first contact is usually a professional and relatively low-pressure inquiry. They will inform you that the payment was missed and will ask you to make an immediate payment to catch up.

The Initial Hit to Your Credit Score

This is an important and often misunderstood point. As soon as your payment is officially 30 days late, your lender has the right to report this delinquency to the two major credit bureaus in Canada, Equifax and TransUnion. A single 30-day late payment on a mortgage can cause a significant drop in your credit score—potentially by as much as 50 to 100 points. This negative mark will remain on your credit report for six years and can make it much more difficult to get approved for any other credit products in the future.

Learn more about home equity loans in Ontario

Check your eligibility in under 60 secs.

See How Much I Qualify For

Entering "Arrears": The 30- to 90-Day Window

If you are unable to make the payment and catch up within the first 30 days, the situation escalates. You are now officially in "mortgage arrears."

The Lender's Tone Changes

The friendly reminders from customer service will stop. Your file will be passed to the lender's internal legal or collections department. The communication will become more formal and more frequent. You will receive official letters, known as demand letters, formally requesting payment and outlining the potential consequences of continued non-payment.

Legal Fees Begin to Accrue

Once the legal department is involved, the lender will start adding their legal costs to your outstanding balance. What started as a single missed mortgage payment of $3,000 can quickly grow as hundreds, and then thousands, of dollars in legal fees are added to the total amount you owe.

The Point of No Return with Your Bank

This is a critical stage. At this point, your relationship with your primary lender is severely damaged. They now view you as a high-risk client in default of your mortgage contract. They will not offer you any new financing solutions. You cannot ask them for a loan or a HELOC to pay off the arrears. From their perspective, their goal has shifted from customer service to loss mitigation. To solve this problem, you will need to find a different source of funds.

The Lender's Final Recourse: Power of Sale

If the mortgage arrears are not paid after approximately 90 days, the lender will begin the formal legal process to sell your home. In Ontario, this process is almost always a Power of Sale.

What is a Power of Sale?

A Power of Sale is a provision in your mortgage contract that gives your lender the right to sell your property if you default on the loan. It is a legal process governed by strict provincial rules. It is different from a judicial foreclosure, which is a longer, court-supervised process. In a Power of Sale, the lender takes control of the property for the purpose of selling it as quickly as possible on the open market.

The Notice of Sale and Your Redemption Period

The formal process begins when the lender's lawyer sends you a Notice of Sale via registered mail. This legal document informs you that the Power of Sale has been initiated. This notice also triggers your legal "redemption period." In Ontario, this is typically a period of 35 to 45 days during which you have the right to "redeem" your mortgage by paying the full amount demanded. This amount will include all your mortgage arrears, all the accumulated legal fees, and any other associated costs.

If you can pay this full amount within the redemption period, the legal action stops, and your mortgage is brought back into good standing. If you cannot, the lender has the legal right to take possession of your home and sell it.

A Broker's Emergency Solutions

Receiving a Notice of Sale is a terrifying, high-stakes situation, but it is not a dead end. It is a deadline. This is the point where a mortgage broker becomes your most important ally. While your bank has shut the door, we have access to the entire alternative lending market and can often secure the emergency funds needed to save your home.

We Act as Financial First Responders

When a client comes to us with a Notice of Sale, we act as financial first responders. Our first step is to perform a rapid triage: we assess the total amount needed to pay the arrears, confirm the exact deadline on the Notice of Sale, and evaluate the amount of equity in the client's home.

The Private Second Mortgage Solution

In almost all of these emergency situations, the fastest and most effective tool is a private second mortgage.

Speed: We have a network of trusted private lenders who are experts in these situations. They can assess a file and issue a commitment in as little as 24-48 hours. The entire process, from application to funding, can often be completed in under 10 business days, well within the redemption period.

Equity-Based Lending: The private lender's decision is not based on your recent income issues or your bruised credit score. It is based almost entirely on the equity in your home. If your property is worth $1.2 million and you only owe $700,000, you have a huge amount of equity that can be used to secure a new loan.

We can arrange a private second mortgage for an amount sufficient to pay out the first lender's arrears and all legal fees in full, immediately stopping the Power of Sale. This loan also often includes some extra working capital to provide the homeowner with the breathing room they need to get back on their feet. This private mortgage is a short-term (usually one year) bridge, with a clear exit strategy to refinance back to a traditional lender once your income and credit have stabilized.

Having Trouble with Your Mortgage?

Not being able to make your mortgage payment is one of the most stressful financial events a homeowner can face. It is a serious situation that requires immediate attention. The worst thing you can do is ignore the problem and hope it goes away.

The moment you anticipate you might miss a payment, or as soon as you have, you should take action. While a Power of Sale is a terrifying prospect, it is not inevitable. With significant equity in your home and fast, expert advice, you have powerful options to protect your property and your financial future.

If you have missed a mortgage payment or have received a demand letter or a Notice of Sale from your lender, the clock is ticking. Contact our brokerage immediately for a confidential, emergency consultation. We specialize in finding fast solutions for complex mortgage situations.

Get Personalized Advice

with an Award-Winning Mortgage Broker

4.9 from 812 reviews

Schedule My Call