Have to Sell Your Home Because You Are Behind on Payments?

Being behind on mortgage payments can feel overwhelming, and you may be thinking, "I need to sell my house when I'm behind on mortgage payments in Ontario." The worry about fees, bank letters, and where this is heading can keep you up at night. You don't have to face it alone. We buy homes, condos, rentals, and land all across Ontario, quickly, fairly, and as-is, so you can regain control before the situation hardens.

This page is about the early stage: a missed payment or two, a call from the bank, property taxes slipping, a private lender asking questions. If your lender has already served a Notice of Sale, the rules and deadlines are different, and our separate power of sale and foreclosure page covers that later stage.

Nothing dramatic happens on day one, but costs start immediately and the lender's process moves in stages. Every lender and mortgage contract is different, so treat this as a typical pattern rather than a schedule:

Missing a payment isn't the only way to default. Many mortgages also treat unpaid property taxes, a lapsed home insurance policy, or a second mortgage registered without permission as a default, so read the terms of yours.

Often, if you ask early. Lenders have more options before an account is in serious arrears than after, and calling them first tends to get a better hearing than waiting for them to call you. Depending on the lender and your mortgage, relief can include a short payment deferral, temporarily reduced or interest-only payments, adding the arrears to the balance, or extending the amortization so the payments shrink.

The Financial Consumer Agency of Canada has published guidance expecting federally regulated banks to offer relief measures to homeowners at risk of falling behind, and mortgages insured by CMHC, Sagen, or Canada Guaranty come with default-management tools the lender can use. Credit unions in Ontario answer to a provincial regulator and set their own policies. Get any arrangement in writing, and remember that deferred interest usually keeps adding up. A non-profit credit counsellor can help you build a budget the lender will take seriously.

Then you have two clocks running. If your property tax is paid through your mortgage, missed mortgage payments can mean missed tax instalments. If you pay the municipality directly, many lenders will pay overdue taxes themselves, add the amount plus fees to your mortgage, and treat it as a default.

On the municipal side, the Municipal Act lets your city or town charge penalties and interest on overdue taxes every month. If taxes stay unpaid long enough, the Act allows the municipality to start the tax sale process by registering a tax arrears certificate against the property. After that registration, the owner generally has one year to pay the full cancellation price, which covers the arrears, interest, penalties, and the municipality's costs. If it isn't paid, the property can be sold at a public tax sale. Many municipalities will discuss an extension agreement before the year runs out, and a sale before that point pays the tax arrears from the proceeds at closing.

Private lenders and second mortgages usually move faster and cost more when things go wrong. Their terms are often short, commonly a year, with renewal fees, high default interest, and bonus or administration charges written into the commitment. A second mortgagee can start its own enforcement even when the first mortgage is up to date, and a private loan that matures without a renewal is due in full.

At a sale, every registered mortgage is paid out in order of priority. Ask each lender for a payout statement showing principal, interest to the closing date, penalties, and legal fees, and add them up before you agree to a price. If the total is more than the house will sell for, a sale alone won't solve the problem, and it's worth speaking with a Licensed Insolvency Trustee about your broader options.