Situated in southwestern Ontario and resting on the Grand River, Brantford, Ontario is blessed with beautiful scenic surroundings and is an accessible city by foot and bike with trails for enthusiasts. Also referred to as “The Telephone City,” Brantford is a town that is both family-friendly and an attractive place to buy real estate. As of the latest 2016 census, the population of the town is 97, 496.

Brantford is amid a real estate upswing that has gained momentum throughout 2020 and continues well into the first quarter of 2021. According to the Brantford Regional Real Estate Association (BRREA) in May 2021 the average price of a single detached dwelling in Brantford has skyrocketed to $961,000 which represents an astonishing 130.6% percent year-over-year increase from May 2020. In the first quarter of 2021, the average price shot up over 13% with houses an average of just 11 days on the market before selling. 

This significant housing market upswing has also been felt throughout Ontario with the average price of properties up over 34% from this time last year. Despite the ongoing pandemic and the resulting economic hit it has taken on many households, falling into mortgage arrears has remained very low. 

The threat of the power of sale or foreclosure in Ontario has remained minimal with just 2,130 properties falling into mortgage arrears out of a total of 2,086,163 owned properties in the Province, according to May 03, 2021 mortgage statistics released by the Canadian Bankers Association.

These numbers are encouraging. What if you are facing a power of sale or foreclosure on your home, despite the very low risk of mortgage default in this Province? If you have fallen behind in your monthly mortgage payments it is highly recommended to understand how the default process works. It is of equal importance to be aware that there are methods to help stop the power of sale of foreclosure on your home.

Power of Sale and Foreclosure- What are the key differences?

In the event, a property owner fails to pay the monthly payments as outlined in the terms of their mortgage contract then this is formally referred to as falling into mortgage arrears. This can also include not making the full payment or paying past the agreed mortgage monthly payment date. 

Once mortgage arrears is an issue the property in question is in default and decisions must be made by a lender as to how to deal with mortgage default. Other conditions beyond missed and/or late mortgage payments are also considered by many lenders to be the default and may lead to the risk of default proceedings initiated by a lender.

  1. Taxes unpaid on the property
  2. Insurance unpaid
  3. Not renewing the mortgage
  4. Letting property conditions go

Under the Ontario Mortgage Act, there are two methods of default that a lender can legally utilize in the attempt to have the property owner put the mortgage in good standings and/or take the necessary steps to ultimately repossess a property in default. 

Power of Sale – This default method is by far the most utilized method of default by Ontario-based lenders. 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 (usually 6 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.

Foreclosure -In this default method the lender takes over ownership of the property. The lender is responsible for all potential gains on the property as well as all liabilities. The lender now has ownership over the property so will therefore retain any profits made on the sale of the property.

Foreclosure differs from a power of sale not only in who retains ownership of the property but also in two other aspects including: 

The involvement of the courts. Unlike a power of sale that does not involve the approval of the courts to initiate when a lender chooses to foreclose on a property, an application must be made with the courts to start the foreclosure process.

The time that each process takes – While a power of sale can be completed in usually an average of 6 months, to foreclose on a given property takes considerably more time than the time it takes to obtain court approval and work with the court’s timeline.

Options open to Branford Homeowners to Stop a Power of Sale/Foreclosure

  1. Selling your house quickly in the state it is currently in In Brantford and throughout the Province, some reputable buyers will assess your property in terms of its market value by reviewing a recent appraisal and comparable properties in your area. These buyers will buy your property at fair market value less a discount in the state your home is currently in. The main advantage with this route to avoid default proceedings on your home is that the lender will not be able to take back possession of your home and you will not have to spend money on any needed renovations. The property is sold as-is.
  2. Negotiate with your lender – There is always an opportunity to arrange a meeting with your lender and attempt to work out ways to bring your mortgage into good standing. Your lender may be open to adjusting terms on your mortgage contract or other financial arrangements.
  3. Taking out a private mortgage to pay off any arrears owed on your propertyprivate lenders are widely available in Ontario who can negotiate different secured mortgage options despite poor credit or reduced income. Private lenders will lend up to 75% LTV (representing 75% of the assessed value of your home). These lenders will generally want to see at least 25% equity on your property and will take into consideration all sources of monthly income when determining the parameters of the private mortgage loan. 

Private mortgage loans will be short-term (generally 1- 3 years terms) and will have higher interest rates than those charged by the banks. Interest on private mortgage loans tends to be between 7% and 12%. Fees associated with private mortgage loans will fall between 3% and 6% of the total cost of the loan. 

4. Renegotiating your principal loan with a private mortgage loan despite ongoing credit problems – Private lenders will be able to offer new principal mortgage loan options that will enable monthly payments to be made comfortably. Interest rates will be higher and the term length will remain short term ( 1-3 years). A short-term principal mortgage will help an Ontario homeowner pay off any arrears owing while helping to restore credit with mortgage payments that can be met comfortably. 

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 who will be able to advise on the best private mortgage option to enable you to keep possession of your valued home. As a Brantford 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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