Talking more about your mortgage questions!
In this video, Chris Molder, a Toronto mortgage broker, sits down to answer a question about strategies you can use if you’re worried about losing your home through foreclosure or power of sale.
How can you stop a power of sale on your home?
Don’t feel like watching? Find the full transcript below!
Are you worried about losing your home? This post is for you!
Are you worried about losing your home?
Chris: [00:00:00] There is no greater stress in life than losing your home if you think that you are at risk of being foreclosed upon or you’ve been given notice of sale under a power of sale. This video is for you.
Chris: [00:00:15] We’re going to review some of the mortgage remedies that might be available to help stop that stress and at least give you a fighting chance. There are so many reasons why you might find yourself in this unimaginable position of losing your home. Pandemic, job loss, poor health, relationship breakdowns or just the general cost of living is just getting so expensive.
So it’s not the most unusual thing. Canadians do suffer from this. You’re not alone and there is no shame in it. And before you get the dreaded knock on the door or notice in the mail, you want to take action. The biggest underlying factor that we see in a lot of the problems and people that we cannot help is that they’ve sat on things for too long.
Taking action early is important
So we want to take action by setting up what’s called a home equity loan. Now, let’s explore exactly what that solution looks like to understand how a home equity loan works.
Chris: [00:01:17] First, we have to understand exactly what home equity is. And it’s pretty simple. It’s the value of your home minus the mortgage debt that’s secured against it. In this example I’m showing you, we have a proposed home value of new $900,000 and $600,000 in outstanding mortgage debt. So home equity is $300,000 and it’s against that $300,000 of home equity that we secure a home equity loan. There are two really critical things, in my opinion, that should be considered before taking out a home equity loan like this to solve a problem like stopping a power sale.
Chris: [00:01:57] Number one, you have to understand the limitations. So home equity loans can only be advanced in general up to about 80 percent of your property’s value. So in the example, we were looking at before, it’s a $900,000 home, 80% of $900,000 is $720,000. There’s existing mortgage debt already of $600,000. So that gives the potential of about $120,000 as a home equity loan to stop that power sale.
It’s important to understand your options
Chris: [00:02:30] And then the second thing that you need to think about is your exit strategy. This type of financing doesn’t come cheaply. So if you are thinking about stopping, the power of sale is going to cost you a lot of money. It’s not a long term solution.
Chris: [00:02:46] This is a Band-Aid to get you from point A to point B, and you want to be really cognizant of what that exit strategy is. And it may very well be giving you the opportunity and the dignity to sell the property yourself rather than getting booted onto the street and watching somebody else sell it on your behalf. If you find yourself in the unfortunate situation of being at risk of losing your home, the number one piece of advice that I can give you is don’t wait, don’t have shame, take action, find a solution sooner than later.
Chris: [00:03:21] My name is Chris Molder.If you or anybody else who you care about might benefit from talking with me, I’m just a phone call or an email away.
Helping you find answers for your mortgage matters!
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