Nobody plans on dealing with foreclosure when they apply for a mortgage in Toronto. Unfortunately, it’s one of the possibilities for homeowners who fail to meet mortgage obligations.
At Northwood Mortgage, we strive to ensure our clients receive the best possible mortgage in Toronto for their individual needs. This reduces the chances of missed payments or other contract reneging.
Of course, the best offense in mortgage repayment is information. Knowing your role as a borrower, and the potential impacts of missed payments simplifies the mortgage process. Here, we’ll go over foreclosures in Toronto, what they entail, and how to avoid them.
What is foreclosure?
Foreclosure is a process by which the bank takes possession of a mortgaged property. This happens when the borrower/homeowner misses mortgage payments or breaks a mortgage contract in some way.
A foreclosure is the bank or lender’s final step in protecting or recovering their investment in your property. Usually, the process isn’t initiated unless several payments have been missed, or multiple contract terms have been breached.
Prior to foreclosure, your lender will give you notice of missed payments. They may try to make arrangements with you to get you caught up. The best thing you can do in this situation is work with your lender and keep them informed.
If something has come up to impede you financially, honesty is the best policy. Some lenders will work with homeowners to ensure payments are made and keep you from a foreclosure situation.
The Foreclosure Process on a Mortgage in Toronto
Foreclosure works differently across Canada. For a mortgage in Toronto, there are two ways foreclosure may occur—the power of sale or judicial sale.
Power of Sale
This is the most common type of foreclosure in Ontario. If a homeowner is unable to make mortgage payments, the lender takes ownership of the home. The borrower is evicted from the property and the property is sold to earn back the lender’s lost investment.
Power of sale is also called a nonjudicial foreclosure and begins 15-days after the missed payment. A notice of sale is served with no need for court involvement. Following a 35-day (approx.) waiting period, the borrower can be evicted and property is taken by thebank.
Once the bank takes the property, it can be listed for sale. The property is sold at market value, or as close as possible to market value price.
Judicial Sale
In a judicial sale foreclosure, your lender takes their claim to court. After the lawsuit process begins, the borrower receives a letter demanding payment. To avoid foreclosure, the borrower has 30-days to pay the court.
If no payment is made in the 30-day period, the lender may request property sale from the court. A judgement is entered, and if approved, the property goes to auction. Once sold, an eviction notice is posted and the borrower is immediately forced to vacate.
Extensions are sometimes allowed in judicial sale foreclosure during the initial 30-day wait period. If you can make your payment but need more time, speak to your lawyer or contact the court immediately.
Contact Northwood Mortgage
Interested to learn more about mortgages in Toronto and how to choose a mortgage that fits your life? Call Northwood Mortgage today at 1-888-495-4825.
