Ontario homeowners regard taking out a mortgage as a serious financial commitment, and it is treated with utmost importance. In Ontario, it is still very uncommon for a borrower to default on his/her mortgage. Statistically, less than 2% of mortgages go into default. Most Ontario homeowners will do everything financially to be able to make monthly mortgage payments to avoid the default of their mortgage loan. This applies to both the principal (first mortgages) and any subsequent second or third mortgages on a property. But what about Power of Sale?
Despite the low probability of default, some processes are in place for traditional and private lenders to recoup their mortgages if a borrower falls behind on payments. Lenders have two established methods to address mortgage default situations. Foreclosure and Power of Sale. Let’s look at the Power of Sale process. In Ontario, Power of Sale is by far the most utilized method lenders will use when a property goes into default.
So what exactly is Power of Sale? The best way to describe this term is when one is taking the right to sell the property. The lender has been given the power to sell a home or property. In the event of Power of Sale, the homeowner still owns the home but the lender now has the legal right to sell it.
What Are the 5 Common Myths About Power of Sale
Homeowners in Ontario may have some misconceptions about the Power of Sale process. Let’s look at some of them:
- The Process is Always Final– This is not always the case. The terms surrounding Power of Sale in a mortgage contract depend on what is written in the contract and agreed upon by both borrower and lender. Borrowers have the opportunity to reverse a potential Power of Sale by utilizing redemption periods to rectify their accounts.
- A Power of Sale Is a Quick Process- The process of the Power of Sale takes time. Following specific steps is crucial, as a mortgage contract is a legal document requiring thorough handling of all paperwork. It usually takes between 3-4 months to complete a Power of Sale.
- Properties Sold Under Power of Sale Are Sold at a Cheaper Cost- This is a common myth. Properties under Power of Sale are sold at or below market value, depending on the condition and market conditions.
- The New Owners of a Power of Sale Property Can Demand Repairs or Fixes- In a Power of Sale purchase, the buyer acquires the property “as is,” meaning the property is sold in its current condition without any obligations for repairs.
- In Ontario, Many Properties Are Being Sold Under Power of Sale– As mentioned earlier, the default rate of properties in Ontario and across the country is under 2% and is the exception as opposed to the rule.
The Basic Steps of the Power of Sale
Missed mortgage payments or defaulting on terms like insurance or property maintenance empower lenders to legally repossess and sell the property. A few steps must take place before a property falls under the Power of Sale. A lender must:
- Allow for 15 days– Once a borrower has missed a payment or is substantially late or has broken another mortgage term such as failure to pay insurance on the property, the Ontario Mortgage Act requires that you provide a borrower 15 days to try to rectify the situation before a lender, traditional, or private can exercise the Power of Sale.
- Send a Notice of Sale to the Borrower- Once 15 days have passed after the term of your mortgage contract has not been met, a lender is now entitled to send a letter to your borrower. This letter is referred to as a notice, specifically a notice of sale. The notice of sale specifies the borrower’s default and grants a redemption period to rectify missed payments or contract terms.
- Issue a Statement of Claim- If the borrower fails to resolve the financial issues and settle the dues by the redemption period’s end, the lender legally issues a Statement of Claim, addressing the debt and seizing the property.
- Take Possession of the Property– After the Statement of Claim has been issued and the borrower has neither paid off the entire mortgage loan plus legal fees or put the mortgage in good standing, the lender is now in the position to take possession of the property and take legal steps to evict by asking the court for a Writ of Possession. The current owners will be asked to evict the property at a specified date. If occupants refuse to vacate voluntarily, authorities have the authority to forcibly remove them from the property.
- Sell the Property- It is only at this final step of the Power of Sale proceedings that the lender can legally possess the property and attempt to sell the property in the condition it is currently in. The fees will be the responsibility of the previous owner and can be very substantial. The profit will go to the former homeowner but will be considerably reduced through the enormous costs associated with a Power of Sale.
What Can You Do to Stop the Power of Sale?
It is important to understand that there is time for you to catch up with your payments. This is why there is a designated period in place and steps that the lender must follow before taking the legal right to sell your property.
At Mortgage Broker Store, we can sit down with you and try to help you stop any Power of Sale and retain possession of your property. It is also important to consult a real estate lawyer to go over the specific terms of mortgage default negotiated in your mortgage contract.
To halt Power of Sale, decisively assess your property’s equity and relevant factors, such as its location and condition. It is certainly to your advantage to try everything possible to stop Power of Sale to save the often substantial fees associated will eat into the eventual profit made on the sale of the house.
Steps to Stop a Power of Sale
- Sell the House Before the 35-Day Period Expires: If you can sell your property through normal channels, you will be able to keep the profit (minus closing costs). This amount significantly outweighs potential profits after a lender levies fees, often up to $30,000, via Power of Sale.
- Obtain a Second Mortgage on Your Property: Taking out a second mortgage on your property would enable you to cover the costs owed to your lender, including fees and any arrears. The second mortgage can also help you cover mortgage payments, avoiding a Power of Sale. Enabling you to cover the mortgage payments more easily and avoid a Power of Sale.
- Take Out a New Primary Mortgage: Sometimes, breaking your current mortgage and negotiating a new one will enable you to cover the mortgage costs and avoid a Power of Sale on your property.
For second or primary mortgages, engaging a private lender is essential for accessing financing on your property. When properties face arrears and the threat of Power of Sale, loans are considered high-risk due to the circumstances.
A private lender will overlook these issues, including any credit issues, to negotiate new mortgage terms. The Loan To Value (LTV) on these loans will not exceed 75% (which represents 75% of the appraised value of your home.) Interest rates will be higher than charged by a traditional lender, and fees may be higher. If a homeowner has a home worth $1,000,000 with a $500,000 first mortgage and is requesting a $250,000 second mortgage, the LTV ratio for the requested mortgage can be up to 75% of the property’s value. All existing mortgages, plus all proposed mortgages, are divided by the appraisal value.
Mortgage Broker Store Is Here to Help
Mortgage Broker Store aids homeowners in halting or navigating the Power of Sale process effectively. Let Mortgage Broker Store steer you in the right direction when contemplating your options.
With a network of lenders across Ontario and countrywide, we will work diligently to facilitate your mortgage needs moving forward. Please feel free to contact us with any further questions you may have.
We offer services all across Canada, including British Columbia, Alberta, Manitoba, Saskatchewan, Quebec, and Atlantic Canada.
For services in cities and towns across Ontario, please see below for more details.
Stop Power of Sale in Ontario
Late mortgage payments or defaulting can lead to the Power of Sale process, affecting your home ownership status. While legal issues exist, potential steps can be taken to halt the Power of Sale process on your home. A Power of Sale process involves specific legal steps your lender must follow before seizing your property. Consulting with a private lender can still halt a looming Power of Sale on your home with immediate action.
Mortgage Broker Store assists in preventing a Power of Sale on your home, guiding you through necessary steps effectively. We connect you with experienced private lenders across Ontario, ensuring reliability and expertise in financing solutions. We’ll address your concerns and guide you through halting Power of Sale on your cherished home. Learn more on how to stop Power of Sale in Ontario.
Second Mortgages in Ontario
In tight financial situations, exploring lending options with your primary asset offers a sensible solution amid credit challenges. Tap into existing home equity for a secured second mortgage, benefiting Ontario homeowners seeking additional financing options. Ontario homeowners with damaged credit can rely on local private lenders to negotiate a secured second mortgage.
Mortgage Broker Store is here to help Ontario homeowners with any second mortgage applications. If banks reject you, we consider criteria beyond credit to secure a second mortgage on your property. Utilizing our network of private lenders, we assist in leveraging your home equity for a second mortgage. We unlock funds from your home for urgent needs like renovations, student loans, or easing primary mortgage burdens. Learn how to get a Second Mortgage in Ontario.
Private Mortgage Lenders in Ontario
Ontario homeowners have a wide range of options when it comes to choosing a lender. Generally, lenders will fall into three broad categories, which include A lenders (big banks), B lenders (credit unions and trust companies) and C lenders (private lenders). As A lenders impose stricter criteria, Ontario borrowers often seek financing from B lenders for mortgage loans. If credit is in issue, however, these borrowers will not qualify for a mortgage loan. Don’t despair. Private lenders consider various factors like assets, income, and home value to negotiate loans beyond credit scores.
Mortgage Broker Store is here to help Ontario homeowners with any mortgage loans that you may require, be it second mortgages, home equity loans, Home Renovations Lines of Credit (HELOC), bridge loans, or consolidating loans. Our extensive network of private lenders in the province addresses your financing concerns, connecting you with suitable mortgage solutions. Learn more about Private Lenders in Ontario.
Reverse Mortgages in Ontario
Ontario homeowners take pride in their homes. You have worked hard to pay off your principal over the years and look forward to owning your home outright. If you are 55 years or older, your financial goals may have changed. You might have paid off most of your mortgage principal, putting you in an advantageous financial position. Instead of a personal loan, access your home equity via a reverse mortgage for expenses like renovations or family support. Reverse mortgages can help you achieve peace of mind while taking advantage of the equity in your valued home.
Mortgage Broker Store can help you in your quest for a reverse mortgage. With access to Ontario’s private lenders, we’re here to answer all your inquiries, leveraging our extensive network. We will sit down with you and take you through the process of applying for a reverse mortgage. You have worked hard to own your home, and now make your home work for you. Learn more about Reverse Mortgages in Ontario.
Home Equity Loans in Ontario
You have heard it before. Tap into the equity built up on your home. Consolidate multiple debts into one easy-to-manage monthly payment, simplifying your financial obligations and reducing stress. Utilize home equity loans for consolidated payments, benefiting from lower interest rates compared to high-interest debts like credit cards.
Mortgage Broker Store can help you with any concerns you may have when applying for a home equity loan. Experienced in negotiating various mortgage loans: home equity, second mortgages, bridge loans, and consolidation loans. We connect you with Ontario’s private lenders, ensuring financial peace despite credit issues that deter traditional options. Learn more about obtaining a Home Equity Loan in Ontario.
Bad Credit Mortgages in Ontario
Even if you are having current credit issues, there are still lending options open to you. Ontario homeowners may face rejection by major banks or credit unions due to credit scores. Private lenders can help bridge this financing gap by providing you with different secured mortgage loan options. We will base the criteria of these loan applications on factors beyond your current credit score. Private lenders secure mortgage loans by assessing additional assets, income sources, and your home’s appraised value for short-term needs.
Mortgage Broker Store can steer you in the right direction when applying for a bad credit mortgage. We offer diverse private lending options, backed by extensive Ontario experience and strong reputations. We’ll address your questions and assist with your lending needs despite current credit issues. Learn more about how to obtain a Bad Credit Mortgage in Ontario.
Debt Consolidation in Ontario
There is nothing worse than debt to provide ongoing worries. Multiple debt payments may give you sleepless nights. Ontario homeowners do have options to help navigate debt concerns. Instead of another personal loan, consider using existing home equity to address ongoing financial concerns. Despite damaged credit and big banks being unavailable, Ontario-based private lenders can help with consolidation loans like home equity options. Don’t let credit issues deter you from consolidating multiple debts into one monthly payment using your property’s equity.
Mortgage Broker Store links Ontario homeowners with private lenders statewide, addressing credit issues while negotiating private mortgage loans. We will address any questions you may have and work with you to help you achieve your lending needs. Learn how to consolidate your debt in Ontario.
Call 416-499-2122 or email ron@mortgagebrokerstore.com to start your journey toward financial solutions today!