Local ON homeowners who are facing a financial challenge may find themselves in foreclosure.
Foreclosure is called Power of Sale here in Ontario and when the mortgage loan doesn’t get paid back the bank begins the process to take control of the property to recoup its losses.
If you find yourself entering the foreclosure process, you might wonder if there is anything you can do about it.
In this blog post, you’ll read about a few foreclosure prevention measures in Toronto that you can take to keep your home from foreclosure.
Foreclosure prevention measures in Toronto ON
These foreclosure prevention measures might not all work in your situation but we’re telling you about them so you can make the decision for yourself:
1. Pay off your mortgage. The quickest and easiest way to end the foreclosure process is to pay off your mortgage. After all, this is all the banks wanted in the first place so they would be happy to let you stay in your home and they get their money back. Admittedly, this is not always possible, which is perhaps the reason that you’re in foreclosure in the first place.
2. Work out a deal with your bank. Sometimes you can work out a deal with your bank where you sit down with a mortgage or foreclosure specialist and talk to them about changing the structure of your mortgage. Perhaps your payments get spread out so they are lower each month, for example. Just make sure that the deal works for you — you don’t want to just repeat the process.
3. Do a short sale. A short sale is when you sell the property less than its’ value and use the proceeds of the sale to pay down or pay off your outstanding amount with the bank. Although this option may not seem like good financial decision, this keeps a foreclosure from impacting your credit score and it gets the bank off your back although the mortgage lender may encounter a loss. By avoiding foreclosure, they avoid all the headaches that come with it and can resell the house. Short sales don’t happen often in Canada, but they do happen. If your mortgage balance is close to the value of the house, then why wouldn’t the bank want to avoid all the lawyers fees, realtor fees property management fees that come with foreclosure.
4. File for bankruptcy. In some ways, a bankruptcy is far more dramatic than a foreclosure because it impacts your whole life. However, once you file for bankruptcy, the foreclosure process has to stop so it’s still a foreclosure prevention measure. You need to balance the pros of eliminating debt with its’ consequences as not all debts can be eliminated, you may also lose assets and your credit score will be effected.
If you’re not sure which one to do, consider this: If you can afford payments and you want to stay in the house then a foreclosure workout arrangement (#2) is probably your best option.
If you want to put everything behind you and move on with your life then consider selling your home and paying off your mortgage with that money.
Considering selling your ON house?
We buy houses in the Greater Toronto Area for cash and would love to see if we can help you if you want to sell your house fast for cash to avoid foreclosure. Contact us by filling out the form on this page and we’ll see if we can work with you.