What is the difference between foreclosure and power of sale?

In foreclosure, the lender takes title to the property through the courts. In power of sale, the lender sells the property to recover the debt and returns any surplus to the borrower. Which applies depends on your province.

How many missed payments lead to foreclosure?

There is no single number, but the process usually begins after several missed payments and formal notice. Lenders generally prefer to work out a solution before pursuing legal action.

Can I stop a foreclosure once it starts?

Often yes, by bringing the mortgage back into good standing, refinancing, or selling the home yourself. Acting quickly and talking to your lender gives you the most options.

Mortgage Glossary

What is Foreclosure?

Foreclosure is the legal process a lender uses to take ownership of a property when the borrower defaults on the mortgage. In Canada the process differs by province, with some using true foreclosure through the courts and others using power of sale, but both end the borrower's ownership when payments are not made.

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Quick answer

Also known as: power of sale, foreclose

Key points

Foreclosure is a legal process triggered by serious mortgage default.
Canadian provinces use either true foreclosure (court process) or power of sale.
In power of sale, surplus proceeds above the debt and costs go back to the borrower.
Foreclosure severely damages credit and should be avoided if possible.
Contacting your lender early often opens alternatives like deferrals or extended amortization.

Foreclosure explained

Foreclosure occurs after a borrower falls seriously behind on mortgage payments and cannot bring the loan back into good standing. The lender pursues a legal remedy to recover the money owed, which can ultimately mean the borrower loses the home.

Canadian provinces handle this differently. In foreclosure provinces, the lender goes through the courts to take title to the property. In power-of-sale provinces, the lender sells the property to recover the debt and returns any surplus to the borrower. Both processes are serious and damage the borrower's credit.

What a Foreclosure is for

Foreclosure and power of sale exist to give lenders a legal way to recover the money they lent when a borrower stops paying. The mortgage is secured against the home, and these processes enforce that security.

How it can help you

Understanding foreclosure helps you act early if you fall behind, since lenders often prefer a workout to the cost of a legal process. Choosing an affordable mortgage in the first place reduces the risk, and Lenderoo lets you shop 40+ lenders for free to find payments you can sustain.

When it comes up

A homeowner who loses income misses several mortgage payments. Rather than waiting for the lender to start legal action, they contact the lender to discuss options such as a payment deferral or extended amortization, which can prevent foreclosure altogether.

Example: power of sale recovering a debt

A borrower owes $300,000 on their mortgage and stops paying. After missed payments and notice, the lender in a power-of-sale province sells the home for $360,000.

The lender recovers the $300,000 balance plus legal and selling costs, say $20,000, for a total of $320,000. The remaining $40,000 surplus is returned to the borrower. If the home had sold for less than the debt, the borrower could still owe the shortfall.

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Questions & answers

Foreclosure: frequently asked questions

Common questions Canadians ask about foreclosure.

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Related mortgage terms

Default

Failure to make mortgage payments as agreed

Read definition

Debt Service Ratio

The percentage of gross income needed to cover debt payments

Read definition

Lender

A financial institution or company that provides the money for a mortgage.

Read definition

Refinancing

Replacing your existing mortgage with a new one.

Read definition

Equity

The difference between a home's market value and outstanding mortgage balance

Read definition

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Find my best mortgage Explore the glossary

Mortgage Glossary

What is Foreclosure?

Find my best mortgage Back to glossary

Quick answer

Also known as: power of sale, foreclose

Key points

Foreclosure is a legal process triggered by serious mortgage default.
Canadian provinces use either true foreclosure (court process) or power of sale.
In power of sale, surplus proceeds above the debt and costs go back to the borrower.
Foreclosure severely damages credit and should be avoided if possible.
Contacting your lender early often opens alternatives like deferrals or extended amortization.

Foreclosure explained

What a Foreclosure is for

How it can help you

When it comes up

Example: power of sale recovering a debt

A borrower owes $300,000 on their mortgage and stops paying. After missed payments and notice, the lender in a power-of-sale province sells the home for $360,000.

Have a question about foreclosure?

Lenderoo shops 40+ lenders for free and matches you with a mortgage professional who explains every term — and finds your best rate.

Get pre-approved free Talk to an expert

Questions & answers

Foreclosure: frequently asked questions

Common questions Canadians ask about foreclosure.

Keep learning

Back to full glossary

Understand your mortgage with confidence

Lenderoo shops 40+ lenders for free and pairs you with a mortgage professional who keeps the jargon simple — and gets you a great rate.

Find my best mortgage Explore the glossary