Friday the 13th, March 2020, has gone down in infamy. That’s the day everything “went sideways”, according to the Canadian Real Estate Association.
The 2020 Ides of March
Pre-pandemic, Canada’s national housing agency, Canada Mortgage and Housing Corporation (CMHC), predicted 2020 would be the year Toronto’s real estate market “bounced back”. Now that home sales are picking up all over Ontario (after a precipitous 12.5% drop in March 2020), it’s time to take stock of your mortgage’s health.
Can Banks Foreclose During COVID-19?
Mortgage payment deferrals only last so long. Once Canada Recovery Benefits end, EI (employment insurance) could be in your future. Most lenders will leave you alone as long as you keep paying your home mortgage. Now is the time to start planning how to keep your family home afloat if your EI benefits run out.
Higher Interest Rates on Horizon?
How will Ontario’s post-pandemic recovery fare? Interest rates go up and down with financial markets. Those, of course, are tied to unexpected events like natural disasters, pandemics and the state of Toronto foreclosures.
So far, the Bank of Canada is expected to hold interest rates steady until at least 2022. Timing your next mortgage or property sale right could allow you to renew at favourable interest rates or sell when real estate markets are prime.
Who’s Default Is It
Defaulting on a mortgage is a legal headache you definitely don’t need right now. Mortgage agreements come with terms and obligations, like making monthly payments.
But you can also be in default if you:
- don’t insure the property
- stop paying property taxes
- remortgage without your lender’s consent
- let your home fall into disrepair
- or you sell without bank approval.
That’s because your home is security for your mortgage lender.
Reminders, Then Demands
The first sign you could be headed for default is constant reminders your mortgage payments are late. Phone calls and demand letters asking for the outstanding balance will follow. Your lender could go to court to get possession of the property and force its sale or foreclosure. Your bank will add the cost of selling your home to whatever you owe.
Being Proactive, not Reactive
Sitting idly by won’t pay the mortgage. If job loss has left you short and you can’t get a mortgage deferral or make interest-only payments, talk to a foreclosure lawyer. They might be able to help delay or stop foreclosure. At least, they can attempt to get power of sale, instead of foreclosure. Power of sale allows your lender to sell the property, pay themselves and give you the excess. Foreclosure is much more drastic.
Knowing When to Quit
If the next letter you get is a notice of sale or statement of claim titled “foreclosure”, your home is about to be sold.
The statement of claim will give you a deadline for paying the balance and legal or other fees. Provided your mortgages don’t exceed your home’s value, you may have a right to request a power of sale instead of foreclosure.
You can try working it out with your lender to see if you can bring the mortgage into good standing. Otherwise, you will need to find a new mortgage. Pronto!
Refinance With a Private Lender
High credit risk clients — that could be you if you’re seriously out of work or in debt — can have problems refinancing.
If traditional lenders turn you down and you are determined to keep your home, ask a mortgage broker for help. They may be able to find a private lender to remortgage your property and pay your first or second lender.
Replacing your mortgage with a new one can work when job loss is temporary or you expect to buy down your debt soon. As long as your mortgages don’t exceed 80% of your home’s value, you could qualify.
Rent While You Look for Work
When foreclosure nightmares keep you awake at night, renting out a bedroom or two, basement suite or cottage at the lake could be the answer. Turning your home into an investment property makes you all that more desirable to mortgage lenders. Be prepared to pay a property manager or real estate firm approximately 10% of rent to advertise your unit and collect the rent.
Selling Your Home to Prevent Foreclosure
As a last straw, you can always sell. Selling avoids an embarrassing foreclosure. It’s better for your credit score and gives you more control over your destiny.
When your lender forecloses, you have no say in the list price and may not get a thing from the sale. By taking charge, you can ask more for the property and maybe swing a deal that works to your advantage with any profits you get.
You keep the leftover equity and your dignity.
Ontario’s Flat Fee Legal Services
Axess Law Ontario real estate lawyers liaise with your new lender when you refinance a mortgage. We close real estate transactions if you decide to sell or want to transfer title to a property to a family member who plans to take over your mortgage.
You pay far less for the same legal services traditional law firms offer. We can refinance your mortgage for $699.99 plus HST or transfer title to a family member is just $649 plus HST.
Our Greater Toronto Area and Ottawa lawyers close real estate sales for $999.99 and up plus HST for home buyers. Selling your home — you pay just $799.99 and up plus HST at Axess Law.
Make Virtual or In Person Appointments
Our licensed lawyers video conference online, anywhere you are in Ontario. Make an appointment with a remote virtual lawyer by dialing toll free to 1-877-552-9377 or call our 647-479-0118 lawyer line in Toronto. Using our online booking form to make appointments takes just minutes.
When you’d rather meet in person, call us or book online to get your mortgage documents or title transfer in order. We have day or evening appointments 7 days a week and can meet you at any of our Axess Law locations.
Try our onsite parking or take the bus — we have easy transit access.
Click here to learn more about Axess Law’s real estate law services.