For those wanting a relaxed small-town feel and yet be within a comfortable commuting distance from central Toronto, Bradford ticks the box. Surrounded by nature and a wide range of outdoor activities for its roughly 24,000 inhabitants, Bradford remains an attractive town in which to buy a property and still have easy access to big-city amenities.

Situated on the Holland river with a great selection of both elementary and high schools and new housing developments recently constructed and in the works, purchasing real estate remains a popular decision. This is reflected in the significant increase of the average price of a single detached dwelling to an all-time selling high of 1.1 million dollars. This represents a 37% year-over-year increase and an 8.1% increase in the first quarter of 2021. 

While these robust Bradford housing numbers are good news for those in good financial standing, there are instances when covering monthly mortgage payments becomes very difficult and there is a danger of falling into mortgage arrears. Given the length of the pandemic that the Province is still slowing climbing out of, Bradford homeowners may have felt a strain on household finances. 

If you are facing an imminent power of sale or foreclosure on your home, there are options available to stop the default process and you must understand what each default process represents. 

It is also beneficial to know that there are lenders that will be able to help negotiate new secured mortgages (either second mortgage or primary mortgage options) that will enable a homeowner to pay off any arrears owing and allow for future mortgage payments to be made monthly moving forward.

What is a Power of Sale and Foreclosure?

Under the Ontario Mortgage Act, there are two methods of default that a lender can legally utilize to handle mortgage default. A lender will be required to take the necessary steps to ultimately repossess a property in default. 

Power of Sale- Under a power of sale, a lender is taking the right to sell the property. The homeowner still owns the home, but the lender now has the legal right to sell it. Any profit made on the sale of the property legally goes back to the property owner or borrower. 

The whole process can take as little as a few months at little cost to the lender. As a borrower, you will be subject to extremely high fees ranging up to 30,000 dollars in the power of sale proceedings. The Power of sale is by far the most common default method utilized by the majority of Ontario-based lenders.

Foreclosure-Unlike the power of sale, the lender takes over ownership of the property in foreclosure. By owning the property, the lender is now responsible for all potential gains on the property as well as all liabilities.  Although unable to sue the former homeowner for any potential shortfall the lender will retain any profits made on the sale of the property.

A foreclosure also involves the courts. The lender must make an application with the courts to start the foreclosure process. A foreclosure also does take considerably longer than a typical power of sale. A foreclosure can take up to a year and must correspond with the court’s timeline. A power of sale usually is wrapped up in roughly 6 months.

Private Lending Options prove valuable solutions to Stop Power of Sales and Foreclosures

One valuable way to stop a power of sale is to seek additional mortgage financing by tapping into existing equity in your home or to replace the mortgage that is in arrears.  In the case of mortgage arrears, private lenders (C lenders) represent the best option. 

Private lenders will be able to provide short-term financing despite poor credit and the legal costs of property under either a power of sale or foreclosure. In the mortgage industry lending options fall into three broad categories and lenders are available for mortgage financing based primarily on borrowers/homeowners creditworthiness and overall household income:

  • A Lenders Banks. Banks demand exemplary borrowing criteria including near-perfect credit as well as easily proven yearly-based full-time income. Borrowers are often put through rigorous mortgage stress tests to be approved for mortgage financing. Lending criteria being as stringent as it allows the banks to offer very low-interest rates.
  • B Lenders- Credit union and trust companies. Although the credit score needed to be approved for mortgage financing is not quite as stringent as their bank counterparts. A borrower/homeowner must be able to demonstrate substantial income and credit scores must still not fall below 550 to be considered for a mortgage loan through these lenders.
  • C Lenders- Private lenders. There are well-established private lenders in the Bradford area on either an individual basis, as part of a group of private lenders or mortgage brokers that specialize in secured private mortgage financing. Private lenders in the Bradford area can lend out different types of second mortgage options as well as renegotiating the terms of your principal mortgage if you are already a homeowner.

In Ontario, when facing an imminent power of sale or foreclosure there is a broad network of well-established and experienced private lenders that will be able to negotiate private mortgage secondary and primary loan options despite any credit problems. Rates will generally be between 7% to 10% and fees associated with these private loans tend to be between 3% to 6% of the total loan amount.

Any loan that will be negotiated will not exceed 75% LTV, or 75% of the assessed value of your home. Private lenders will assess both the LTV and the existing equity in your home ( usually at least 25% equity is preferred) to determine the terms of a private mortgage loan.

A private lender will also be able to help an Ontario homeowner negotiate the terms of a new first private mortgage loan with terms that will allow the homeowner to pay off arrears and manage the monthly mortgage payments. The mortgage loan will have a term length of between 1 to 3 years. This private mortgage financing can help with short-term finances to stabilize and to help restore good credit.

A third option to stop a power of sale or foreclosure on a property is to sell the property as is to a well-established Ontario buyer. A buyer will assess the market value of properties in your area and determine the market value of your home based on a current appraisal of your property. Your house will be bought at market value with a discount, saving time and money on renovation costs and fix-ups/repairs. Your property can be sold in as little as a week before the power of sale process is final.

Mortgage Broker Store Can Help Stop a Power of Sale/Foreclosure on Your Home. Mortgage Broker Store can help connect you with a private lender to discuss your particular financial concerns. We are connected to a large network of well-established private lenders in the Bradford area who will be able to advise on the best private mortgage option to enable you to keep possession of your valued home. As a Bradford homeowner, it is always recommended to look at all options open to stop any default proceedings. Any step you take will move you closer to keeping and enjoying your home moving forward.

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