Mortgage Default Process in Canada

When a borrower defaults on their mortgage, lenders follow a structured process before foreclosure or power of sale.

1. Demand Letter – A formal notice stating the borrower is in default (e.g., missed payments, insurance lapse), listing the amount owed (principal, interest, fees), and giving 7–30 days to correct the default. It warns that legal action may follow if unpaid.

2. Notice of Sale – Sent if the default isn’t fixed. It outlines the amount due, nature of the default, property details, and sets a 30+ day deadline to pay arrears in full. This starts the Power of Sale timeline and adds legal costs.

3. Statement of Claim – Filed in court if payment still isn’t made. It claims the full mortgage balance, interest, and legal fees, and may seek possession of the property. Borrowers typically have 20 days to file a defence.

Borrower Action: Respond immediately, contact your lender to explore repayment or refinancing options, and consult a lawyer or mortgage professional to understand your rights.