In short
It damages your credit for years and you lose the home and your equity in it.
The best protection is budgeting for the whole cost of owning, not just the mortgage: taxes, insurance and repairs add up.
How foreclosure works in Ontario
Foreclosure is a lawsuit. The lender asks the court for an order that transfers ownership of the home to the lender and ends the borrower's right to redeem it by paying off the debt.
Because the lender ends up owning the property, any equity the borrower had can be lost. That's the key difference from a power of sale, where the home is sold and any surplus goes back to the owner after debts and costs are paid.
The court process includes formal notice to the borrower and others with an interest in the property, and a period to defend or redeem before a final order is made. Rules and timelines are set by the courts, so legal advice matters.
Why it's rare in Ontario
Most Ontario mortgages include a power of sale clause, and lenders almost always use that route instead. A power of sale under the Mortgages Act doesn't need a court order and is usually faster.
Foreclosure takes longer, involves the courts, and is generally pursued only in limited situations. If you hear about a home being foreclosed in Ontario, it's often actually a power of sale.
Either way, the lender has to follow the legal steps, and the owner has rights along the way.
What borrowers can do
If you're falling behind, talk to your lender early. Lenders may be able to offer options such as a payment deferral, extending your amortization or adding missed payments to the balance.
If enforcement has started, get advice from a real estate lawyer right away. Deadlines in both foreclosure and power of sale matter, and the earlier you act, the more choices you usually have.
The best protection is budgeting for the full cost of owning, not just the mortgage: property tax, insurance, utilities and repairs all add up.
Missed mortgage payments are also reported to the credit bureaus and can make borrowing harder for years, so it pays to act early.
Common questions about foreclosure
Does Ontario use foreclosure or power of sale?
Ontario lenders mostly use power of sale, not foreclosure. Power of sale lets the lender sell the home after default without a court order, under the Mortgages Act. Foreclosure is a court process that's used much less often in Ontario than in some other provinces.
What is the difference between foreclosure and power of sale?
In foreclosure, the lender takes ownership of the home through the courts, and the borrower can lose all their equity. In a power of sale, the lender sells the home and must account for the proceeds, so any money left after the mortgage, other debts and costs goes back to the owner.
How long does foreclosure take in Ontario?
Foreclosure usually takes longer than a power of sale because it's a court action, often many months or more. Timing depends on the court, whether the borrower defends the action, and any redemption period the court allows. A lawyer can explain the timeline for a specific case.
What should I do if I can't pay my mortgage?
Contact your lender as soon as you see trouble coming, before payments are missed if you can. Lenders may offer relief options. If you receive a notice of sale or a court claim, speak with a real estate lawyer quickly, because the deadlines are short.
Sources
General information for Ontario, updated October 2026. Not legal, tax or mortgage advice. Rules change, so confirm with your lawyer, lender or the source above before you rely on it.