Some homeowners have been getting by on a reduced income. Now they must try to keep up with their mortgage payments or risk losing their home as evictions resume. With many homeowners having already used a mortgage deferral, they are expected to pick up the slack on their mortgage payments despite having fewer resources and assistance.
If you have been struggling to make ends meet before the eviction halt ended, then you need a strategy to maintain your mortgage payments going forward. Failure to do so increases the chances that you could lose your home through a power of sale or foreclosure.
What is a Power of Sale?
A power of sale is a legal action taken by your lender to get its money back. A power of sale allows your lender to seize and sell your home to get the money back that was loaned to you.
With a power of sale, you will keep the remaining funds from the sale once your lender has been paid off and all their legal and real estate fees have been paid for.
While this is less than ideal, it is preferable to foreclosure.
What is a Foreclosure?
During a foreclosure, your lender is also pursuing a legal remedy to get their money back once you have broken the terms of your mortgage agreement.
Both a foreclosure and a power of sale are triggered when you have broken the terms of your mortgage agreement. This could be many things, from failure to pay property insurance or taxes, but the most common reason is missed payments.
The main difference between a power of sale and a foreclosure is what your lender can do with your property.
During a power of sale, your lender must sell your home as quickly as possible, they must return the remaining funds once all expenses have been covered. With a foreclosure, the lender gets the title to your home. They are now the new homeowner and can choose to do with your home as they please.
If your lender sells your home in foreclosure, they don’t have to return any extra money to you. A foreclosure leaves you with nothing.
Stopping Power of Sale or Foreclosure in Ontario
The only way to stop a power of sale or foreclosure is to get your mortgage back in good standing or repay your lender.
If you know you’ll miss a payment, contact your lender immediately. You may be able to delay payment or renegotiate terms. There is no guarantee your lender will accept any proposal.
If you miss a payment, you may need to pay a fine and owed amount to restore your mortgage.
To prevent home seizure, repay the remaining loan balance during power of sale or foreclosure proceedings.
There are a few ways you can do this:
A HELOC
You could get or a home-equity-line-of-credit or HELOC to pay off your lender. A HELOC allows you to draw funds as you need them from an account. HELOC funds can stop power of sale or foreclosure, up to the amount of home equity used to secure the loan.
A Second Mortgage
If you have enough equity in your home, you can secure a lump sum of cash with your home equity by getting a second mortgage.
Mortgage Refinancing
Another option is mortgage refinancing. Mortgage refinancing replaces your old mortgage, paying off the lender and preventing power of sale or foreclosure.
GTA Real Estate in 2021 and How it Affects Power of Sale or Foreclosure
Throughout the COVID-19 pandemic, Ontario’s housing market has continuously grown in value. If you are at risk of a power of sale or foreclosure, you can use this development to your advantage.
Toronto and the GTA housing prices are rising as the region’s population grows.
Studies from Ryerson University found that Toronto is the fastest-growing city in North America. In January 2021, the Toronto Regional Real Estate Board reported that the average price for a residential home in the region grew by over 10 percent from the same time the year before. If you own a home in Toronto or the GTA, your home has likely increased in value, providing more equity you could use to stop a power of sale or foreclosure. You can use the Automatic Private Mortgage Pre-Approval Tool to determine if you have enough equity to secure financial assistance.
Banks and most financial institutions have strict loan approval requirements. At Mortgage Broker Store, you can get help regardless of credit or income.
If you own a home in southern Ontario with enough equity, then they can work with you. Contact their team to speak directly with mortgage brokers in the GTA and receive a free quote with advice.
