Stop Power of Sale in Ontario

Process of Stop Power of Sale in Ontario

When a homeowner in Ontario gets a Notice of Sale, it can be an upsetting and stressful time. Likely the homeowner is already facing financing difficulty, and now they are facing the prospect of losing their home. Perhaps you are reading this because you have found yourself in this situation and you are wondering if there is anyway to stop a Power of Sale in Ontario, The good news is that you can.

In this article, we will cover what Power of Sale really means, how it works, and how to stop it.

What is Power of Sale?

A Power of Sale is a legal mechanism that a mortgage lender can use to recoup their money when a borrower becomes unable to pay. If the homeowner is unable to bring their mortgage back into good standing – plus pay any applicable legal fees – within a set timeframe, a Power of Sale gives the lender the right to evict the borrower from their home and to sell it. Proceeds from the sale go to the lender to pay them pack the money that is owed. Any money that is left after that (which usually isn’t much), first goes to other creditors and finally to the borrower.

How does power of sale work in Ontario?

The steps needed for a lender to carry out a Power of Sale in Ontario are very strict. When the borrower stops making their payments, the lender may begin the process by notifying the homeowner that their mortgage is in arrears.

This is the borrowers first opportunity to stop the Power of Sale – by paying what they owe.

If the homeowner fails to bring their mortgage back into good standing, the lender may then issue a Notice of Sale which must be sent by registered mail. This must be done no earlier than 15 days after the default. Upon receiving the Notice of Sale, the borrow will then have a minimum of 35-40 days (this is called the redemption period) in order to pay the lender what they owe plus any legal fees.

If, after the redemption period, the homeowner still has not brought their mortgage back into good standing, a Statement of Claim may be issued. This allows the lender to take possession of the home, evict the lender, and sell the property.

Although the lender has the authority to sell the property, the title of the property doesn’t actually get transferred to them (this is one way that a Power of Sale differs from a foreclosure). Furthermore, the lender is legally required to sell the property at fair market value (they cannot discount it just to make a quick sale).

The money from the sale then goes to the lender up to what they are owed, then to other creditors, and finally if anything is left – to the borrower.

How long is the Power of Sale process in Ontario?

There are certain minimum timeframes that must be met for a Power of Sale to be valid in Ontario. They are as follows:

  • A minimum of 15 days between informing the borrower that they are in default and issuing a Notice of Sale.
  • 35-40 days (depending on the type of property) after the Notice of Sale before any further action can be taken.
  • Following this, there is a court process to give the lender possession of the property.
  • How long it takes to sell the property, will depend on a number of factors including the real estate market at the time.

How to stop Power of Sale in Ontario?

Now that you understand what a Power of Sale is and how it works, the next question on your mind is likely, how can you stop this. After all, no homeowner wants to face the prospect of losing their home. Fortunately, there are a number of strategies that you can use to stop a Power of Sale.

Ways that you can stop a Power of Sale including the following:

  • Bring your mortgage back into good standing – if you have the means, to do so the easiest and fastest way to stop a Power of Sale is to simply pay the lender what you owe. This may require you to dig into your savings, take money out of your TFSA, or perhaps borrow from a life insurance policy.
  • Refinance your mortgage –another option is to refinance your mortgage. This involves breaking your mortgage with your current lender, and getting a new mortgage to pay your current lender what is owed. With this option, you must keep in mind that there will be a financial penalty for breaking your mortgage, but it could be well worth it, if it means you can continue to live in your home.
  • Get a second mortgage – borrowing from your home equity by means of a second mortgage is another way that you can bring your mortgage back into good standing and stop a Power of Sale. A second mortgage is simply a secured loan against your existing home equity. If you decide to get a second mortgage however, it is important that you budget accordingly so you know that you will be able to make the additional payments – otherwise, you could end up putting your home at risk again.
  • Get a Stop Power of Sale loan – this is a special type of loan specifically designed to help people who are facing Power of Sale. The amount you can qualify is based on how much home equity you have, but it is still an unsecured loan (meaning you are not putting your home at further risk).
  • Sell your home – finally, you have the option of selling your home – before the lender does. By being proactive and selling your home first, you may be able to get more money for your home than the lender would have. You will still have to pay them what you owe, but there is a very good chance at least that there will be more money left.

What is the best solution to stop a Power of Sale in Ontario?

The best solution to stop a Power of Sale in Ontario really depends on your unique situation. If you have the money on hand to bring your mortgage back into good standing, that is usually the best.

Refinancing or getting a second mortgage can be good options if you have sufficient home equity, but you need to be certain that you’ll be able to make the payments. And which one of these options you should choose, can be dependant on the cost (second mortgages will have a higher interest rate but refinancing has a financial penalty). Your mortgage broker can run some calculations to determine which one makes more sense for you.

Or getting an unsecured stop Power of Sale loan, may make the most sense for you financially.

Because each situation is different, there is no one best way to stop a Power of Sale. It must be taken on a case-by-case basis.

How do I get the best interest rate on a loan to stop a Power of Sale in Ontario?

Whether you are interested in borrowing from your home equity or getting an unsecured stop Power of Sale loan, you want to ensure that you get the best possible interest rate. And to do this, you should work with a mortgage broker.

Mortgage brokers have a huge network of lenders that they work with, and your broker will compare rates on your behalf to help you get the best deal.

How can I stop a Power of Sale in Ontario if I have bad credit?

Some homeowners facing Power of Sale worry that their credit won’t be good enough for them to get a loan to stop their Power of Sale (after all, the reason they are in this situation is because of financial difficulty).

Fortunately, a qualified mortgage broker can often help them get a loan even with bad credit. There are a number of lenders out there that specialize in helping those with bad credit, and mortgage brokers have connections with these lenders as well.

Advantages of working with a mortgage broker to stop a Power of Sale in Ontario

While it is not required that you work with a mortgage broker in order to stop Power of Sale, it is highly recommended that you do. The Power of Sale process can be tricky to navigate, but your mortgage broker is there to help.

They can review your situation and help you determine the best method of stopping a Power of Sale for your unique situation. Further, they can use their network of lenders to help you find the best deal on a loan.

Facing a Power of Sale is stressful, but your mortgage broker can help you through it so that you may keep your home.

Contact us today!

If you are facing a Power of Sale, our trained mortgage brokers are here to help. Give us a call today to set up an appointment.

If you are looking to get a stop power of sale in Ontario, we can help! Contact us today to learn more.