How To Stop A Power of Sale In Ontario
Normally, missing a few payments on your mortgage will result in your lender placing your property into what is known as a “Power Of Sale“
This is the most common method for mortgage lenders in Ontario to recover their money, although most homeowners aren’t aware of the various options available to them.
Power Of Sale vs. Foreclosure
Most people tend to confuse the concept of “Power of Sale” with “Foreclosure“, which are completely different legal processes:
- A Power of Sale takes around six months to process and allows the lender to sell the property.
- A Foreclosure takes over a year to process and gives the lender ownership of the property.
In a Foreclosure, the lender takes the property, along with all of the equity, but in a Power of Sale any excess profits from the sale must go to the homeowner.
However, the amount of the total legal bill for completing a Power of Sale can be in excess of $30,000.00, which can quickly reduce the profits that would have gone to the homeowner.
The good news in all of this is that there are several options available to homeowners which can either allow them to keep the home or make more money off the property’s sale.
Private Mortgage Lenders In Ontario
In order to stop the Power of Sale action in Ontario, the borrower must pay the mortgage lender the money they are demanding.
However, getting a new mortgage while under Power of Sale can be difficult as most banks (and other traditional lenders) will refuse to grant a mortgage to a person who is under a Power of Sale.
For such a person to get a mortgage, he or she would need to contact a private lender that specializes in high-risk mortgages as private lenders are able to ignore any legal issues or problems with income or credit score.
Private mortgage lenders can approve a loan based on the equity in a property: If a homeowner has at least twenty percent of the value of their home in equity, they can get approved.
For example, if a property is worth $1,000,000, and the value of its mortgage is $800,000, then the property has $200,000 (or twenty percent) in equity.
Once approved, the private lender can pay off the existing mortgage lender to stop the Power of Sale.
Sell Your House Before Your Lender Can
In the case where you cannot get approved for a new mortgage with a private lender, you still have the option to sell your home.
In a typical Power of Sale, there are three to four months from the initial default until the eviction.
When a homeowner sells their property themselves, they have more control over what the property sells for and the general time-line for the sale.
Since the legal bills involved with the Power of Sale increase for every step in the process, the homeowner can minimize these costs by selling quickly.
Typically, people who sell their property before the lender can get a high price for their property.
This is because the homeowner is more incentivized to get the highest price possible, whereas the lenders are usually only interested in recovering their initial investment.
How A Mortgage Broker Can Help
Many private lenders who work with people in Power of Sale do not advertise their services and can be difficult to contact.
To have an easy and stress-free time in resolving your Power of Sale you may want to contact a specialized mortgage broker.
Mortgage Broker Store is one of the top brokerages in Ontario that focus on Power of Sale and Foreclosure situations and have a network of lenders who are quickly able to lend out money to stop legal proceedings.
The principal broker, Ron Alphonso, is a known authority in the industry who is often featured in various media outlets such as Global TV and The Globe and Mail.
The team at the Mortgage Broker Store offers free consultations to people in Power of Sale and Foreclosure.
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