The 2021 housing market broke a lot of records across the country. Rural and urban cities reported unprecedented numbers on high-priced sales, days in the market, and low inventories. Although we are seeing the light at the end of the pandemic, the Canadian housing market for 2022 remains strong. Canada’s unmet housing demands persist as it aims to meet soaring immigration targets, further escalating housing needs.
“The Toronto Regional Real Estate Board predicts a 12% rise in average home prices to approximately $1,225,000. Despite expected interest rate hikes, driven by the labour market and population growth, this trend persists.
As Ontario borrowers seek mortgage financing in a robust housing market, the choice of lender depends on creditworthiness and income. Questions are also raised as to what lending options are open to those with damaged credit.
Financial challenges causing mortgage arrears in Ontario can lead to imminent Power of Sale for homeowners. Numerous lending options exist for Ontario homeowners seeking second mortgages or borrowers seeking their first mortgage. There are ways to stop the Power of Sale on an Ontario property. Lenders aim to avoid Power of Sale; Ontario homeowners should likewise strive to prevent it and protect their homes.
Understanding Power of Sale
In Ontario, processes are available for traditional and private lenders to get back their mortgage funds in the unlikely scenario that a borrower falls behind on payments. Lenders utilize two methods to handle mortgage default. Foreclosure and Power of Sale. In Ontario, Power of Sale is the most utilized method lenders will use when a property goes into default.
What is Power of Sale? In this default process, the lender takes the right to sell the property. The lender possesses the authority to sell a home or property. In Power of Sale, the homeowner retains ownership, yet the lender gains the legal right to sell the house.
The homeowner defaults once a property owner falls behind in monthly mortgage payments or fails to meet other mortgage terms. The consequences of default can lead to legal actions such as foreclosure or Power of Sale proceedings.
Power of Sale – What Does it Involve?
A lender can now legally possess and sell the property, following distinct steps in Power of Sale. A lender must:
- Allow for 15 days – Once a borrower has fallen into arrears, the Ontario Mortgage Act requires that the lender allows 15 days for the borrower to try to rectify the situation before the lender—traditional or private— can exercise the Power of Sale.
- Send a Notice of Sale to Borrower – After 15 days without rectification, lender can notify homeowner. This is an official Notice of Sale, signalling borrower default and providing a redemption period for rectification.
- Lender Will Issue a Statement of Claim – If the borrower does not pay what is due by the redemption period, the lender has the legal right to issue a Statement of Claim to address the debt owed and take possession of the property.
- Lender Can Apply to Take Possession of the Property – After the Statement of Claim has been issued. The borrower hasn’t paid the mortgage or fees; the lender seeks court permission for possession and eviction with Writ of Possession. The current owners must leave by the specified date or face forcible removal by authorities.
- Take Steps to Sell the Property – Lender can possess and sell in current condition in final Power of Sale step. The previous owner is responsible for substantial fees, reducing profits significantly in Power of Sale.
Ways to Stop Power of Sale
Ontario homeowners must understand that the Power of Sale process is time-consuming and demands patience. Power of Sale typically takes about 6 months from notice to lender property possession. This time is very valuable. It allows for several options to try to stop the Power of Sale, including:
- Attempt to sell the house before the lender takes final possession – There are buyers in Ontario who can buy your property in its current state. Evaluating your property’s current appraisal and local comparables confirms it’s available for purchase at market value with a discount. Preventing exorbitant costs of Power of Sale, up to $30,000, and avoiding renovation expenses as the property sells as-is.
- Obtain a second mortgage on your property – By taking out an additional mortgage on your current property, a property owner will have access to funds to pay off any arrears and cover the monthly mortgage payments comfortably. To avoid Power of Sale, tap into home equity. It gains control, prevents complications, and improves credit with timely payments.
- Take out a new primary mortgage– There is also the possibility of taking out a new mortgage to replace the current mortgage that may be in default. There are well-established private lenders throughout Ontario that will assess the Loan-To-Value (LTV) on your property by assessing a recent assessment. Private lenders offer up to 75% LTV, needing 25% equity. First or second mortgages can halt an impending Power of Sale.
Mortgage Broker Store Can Help Stop a Power of Sale on Your Home
Mortgage Broker Store is well experienced and has specialized knowledge in the Power of Sale process as well as methods to stop a Power of Sale. Our network of private lenders can help clear arrears, legal fees, and preserve your home’s value through financing options. If you’d like a free consultation on your situation, you can call 416-499-2122 or email ron@mortgagebrokerstore.com, and we will get back to you the same business day.
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