Foreclosure
Quick Definition
A legal process where a lender takes ownership of a mortgaged property after default.
Full Explanation
Foreclosure is a legal remedy available to mortgage lenders in Canada when a borrower defaults on their mortgage. The process allows the lender to take ownership of the property and sell it to recover the outstanding debt. Canada primarily uses two processes: Power of Sale (most common in Ontario and most provinces), where the lender sells the property but does not take ownership; and Judicial Foreclosure (used mainly in BC, AB, NS), where the court oversees the transfer of ownership. Either process severely damages the borrower's credit and can result in a deficiency judgment.
Related Terms
Default
Failure to make required loan payments as agreed with the lender.
Mortgage
A secured loan used to purchase real estate, with the property as collateral.
Power of Sale
A lender's right to sell a mortgaged property upon default, without court involvement.
Credit Score
A 3-digit number (300–900) indicating your creditworthiness to lenders.
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