How Much Equity Do You Need to Stop a Power of Sale in Ontario?

To stop a power of sale with a private mortgage, the equity left in the property after everything owed is paid has to be enough to cover three things: the full amount owing, the cost of carrying the property through the exit, and a cushion for what goes wrong. That, not credit score or income, is the test a lender applies. If the number works, the private mortgage buys you the months to sell the property yourself and keep more of the equity than a lender-run sale would leave you; if it does not, no lender can take it on, and the honest answer is to sell now, before the costs grow.

Why Equity Is the Whole Question

A bank declines a borrower in arrears on income and credit. A private lender sets most of that aside and asks one thing: if this goes wrong again, does the property cover everyone? The existing lender is paid out of the new mortgage, the new mortgage is repaid from the exit (a refinance or a sale), and the borrower's own equity is what stands behind both. Every dollar of arrears, cost and fee comes out of that equity, so the lender is really deciding whether enough of it is left to make the exit safe. Stonefield Capital underwrites exactly this way: equity and exit first, no income test, no minimum credit score, and a Notice of Assessment always requested to confirm there are no CRA arrears ranking ahead of the mortgage.

The Three Things the Equity Has to Cover

1. The amount owing

Not the mortgage balance you remember, but the payout: principal, arrears, interest to the day of payout, and the legal and enforcement costs the lender has added, all of it growing while the file waits. Add every other charge registered against the property (a second mortgage, a CRA lien, property-tax arrears, a construction lien), because the new mortgage sits behind or pays out all of them. Then add the cost of the new mortgage itself: lender fee, broker fee, and legal fees on both sides.

2. The cost of the sale or exit period

A private mortgage is a bridge of a few months to a year, and the bridge has a cost. In most cases the plan is to sell, so the cost is the interest for as long as it takes to sell and close, plus the selling costs: commission, legal, any work needed to list. If the plan is instead to refinance back to a bank, it is the interest for the term. Where the borrower cannot make the monthly payments, some or all of the term's interest may be held back from the mortgage proceeds, which uses more of the equity up front. A lender counts all of this before it counts anything for the borrower.

3. A contingency

Comparable sales are an estimate, markets move, closings slip, and a listing under pressure rarely fetches the top of the range. The lender leaves room for that. The size of the cushion depends on the property and how quickly it would sell: a detached house in an active suburb needs less than a rural property with few comparables, which is why loan-to-value steps down as liquidity does. Stonefield's current rate ranges by loan-to-value are published at stonefieldcapital.ca/private-mortgage-rates; the limit for a given property comes from its comparable-sales analysis, not from a single published number.

This Only Works If You Sell It Yourself

Be clear about what the refinance is for. In most cases it is not a way to keep the house. Under a Notice of Sale the lender sells on its own schedule and every week of arrears, interest and enforcement cost comes off your equity first. Paying that lender out with a private mortgage stops the clock and gives you the months to sell the property yourself, at market value, with your own agent and lawyer. The reason to do it is to end up with more money in your hand at the end than the lender's sale would have left you. If the private mortgage's fees and interest would eat that difference, it is usually not worth doing, and Stonefield will say so rather than write a mortgage that only delays the same outcome. Keeping the home by refinancing back to a bank is the exception, and it needs income that has genuinely recovered and a bank willing to take the file at the end of the term.

An Illustration

Illustrative figures only, not a quote and not Stonefield's pricing. Comparable sales put a house at $700,000. The payout statement from the existing lender, with arrears, interest and its costs, is $520,000, and $15,000 of property-tax arrears is registered ahead of any new mortgage. That leaves $165,000 before the new mortgage's own fees and legal costs, before the interest for the term, and before a cushion. Selling it yourself costs commission and legal, a few percent of the price. What is left after all of that is what you keep, and the question is whether it is meaningfully more than the lender's sale would have left you once its own costs and a pressured price came off. On these figures it usually is; make the payout $600,000 and it usually is not.

What If There Is Not Enough Equity?

Add a second property. If the borrower, or a family member willing to pledge it, owns another property with equity, the new mortgage can be secured against both (cross-collateralization) to bring the blended loan-to-value into range. This is the standard remedy, not an exception.
Sell now, on your own terms. A voluntary sale at market value almost always returns more equity than a sale conducted by the lender under the Notice of Sale. A short private mortgage can still make sense here, purely to stop the clock and give the listing time.
Talk to the existing lender and a lawyer. Some lenders will agree to a repayment arrangement if the arrears are small, and a real estate lawyer can say what the file's real position is. Neither replaces the equity test, but both can change the timeline.

What does not work is a private mortgage that only just fits on day one. It postpones the sale a few months, adds a layer of cost, and leaves the borrower in the same place with less. Stonefield declines those files, and says so in the first response rather than at closing.

How to Get the Answer in a Day

Ask the existing lender's lawyer for a written payout statement.
List everything registered on title: mortgages, liens, tax arrears. A lawyer or the broker can pull the parcel register.
Gather two or three recent sales of similar homes nearby, or let Stonefield run its own comparable-sales analysis, which replaces a formal appraisal in most cases and saves both the fee and the days.
Decide the exit: in most cases a sale you run yourself; less often a refinance back to a bank. The lender underwrites the plan, so it has to be a real one.

With those four things, Stonefield typically issues terms within a day of a complete file. Funding in as little as 48 hours is possible once both lawyers are ready; legal preparation, not underwriting, is the usual bottleneck.

Homeowners and Brokers: How to Start

Homeowners can describe the situation at stonefieldcapital.ca/borrowers/stop-power-of-sale or ask for a call back on any page of the site; a Stonefield-approved mortgage broker calls within one business day, and if a Notice of Sale has already been served, phoning (416) 889-4198 is faster. Brokers submit through the deal submission page with the payout statement and the registered charges. Stonefield Capital Inc. is a licensed mortgage brokerage in Ontario (FSRA #13722); mortgages are administered by Stonefield Mortgage Administration Inc. (FSRA #13636). All lending is Ontario-only.

Frequently Asked Questions

Is there a minimum equity percentage to stop a power of sale?

Stonefield does not publish a single minimum, because the answer depends on the property, its market and the exit. The published rate ranges by loan-to-value at stonefieldcapital.ca/private-mortgage-rates show how pricing moves with equity; the limit for a specific property comes from its comparable-sales analysis. Submitting the payout statement and the registered charges with the file is what turns "roughly" into a same-day answer.

Does the lender count the arrears and costs as part of the loan?

Yes. The payout statement, including arrears, interest and the existing lender's costs, is paid from the new mortgage, so all of it counts against the equity, along with any other registered charges and the new mortgage's own fees.

Can equity in a second property help?

Yes. Securing the new mortgage against a second property that the borrower, or a family member willing to pledge it, owns is the standard way to bring a high loan-to-value into range. Both properties are then registered as security.

Does income matter at all?

No. The file is decided on the equity and the exit, and there is no minimum credit score. A Notice of Assessment is always requested, but for CRA arrears, which rank ahead of the mortgage and reduce the equity, not to test income.

What if the property has already been listed by the lender?

A refinance can usually still close until the lender has signed a binding agreement of purchase and sale, but the margin is thin, and the equity test is stricter because time and costs have grown. Retain a lawyer the same day and get the payout statement immediately.