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Mortgage Arrears

Understand mortgage arrears in Canadian real estate, what they are, what causes them, and how borrowers can avoid or resolve them before legal action begins.

Mortgage Arrears

May 22, 2025


What are Mortgage Arrears?

Mortgage arrears occur when a borrower falls behind on scheduled mortgage payments, typically by more than 30 days.

Why Mortgage Arrears Matter in Real Estate

In Canadian real estate, falling into mortgage arrears signals a risk of default. Lenders closely monitor arrears and may begin legal proceedings if payments are not brought up to date within a set timeframe.

Consequences of arrears include:

Borrowers in arrears may qualify for hardship programs, payment deferrals, or refinancing to catch up. Provincial laws govern how lenders must notify and respond to arrears, often requiring notice before legal action.

Understanding mortgage arrears helps homeowners take early action to avoid losing their home or facing long-term financial harm.

Example of Mortgage Arrears in Action

A borrower who misses three consecutive payments enters mortgage arrears and receives a lender notice warning of possible legal action.

Key Takeaways

  • Indicates missed mortgage payments.
  • Leads to penalties and lender notices.
  • Can trigger legal recovery processes.
  • Impacts credit and ownership rights.
  • Can be resolved through proactive steps.

Related Terms

  • Default
  • Foreclosure
  • Power of Sale
  • Refinance
  • Credit Score

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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