Can Family Help Me Save My Home?
Yes. If you're facing a Power of Sale, help from family can sometimes make the difference between having a workable solution and running out of options. The help does not always have to mean simply giving you enough cash to pay the mortgage arrears.
← Back to Power of Sale QuestionsFamily Help Can Change the Financing Options.
When a homeowner is facing mortgage enforcement, we look at the entire situation: property value, total amount owing, available equity, income, credit, timing and whether there are other resources that can be brought into the solution.
Help With the Arrears
Family may be able to contribute funds toward mortgage arrears, lender legal fees or other amounts required to resolve the default. Reducing the amount owing can sometimes make the remaining problem much easier to finance.
Help Reduce the New Mortgage
Even when family cannot pay everything that is owing, contributing part of the required funds can reduce the size of the new mortgage and bring the loan-to-value into a range a lender may accept.
Co-Signing or Guaranteeing
Depending on the lender and the circumstances, a family member may sometimes participate in the financing as a co-borrower or guarantor. This can help in certain situations, although it does not solve every financing problem.
Equity in Another Property
If a family member owns another property with substantial equity, there may be situations where a lender will consider additional real estate security as part of the financing solution.
Create More Time
Family funds may sometimes provide enough breathing room to deal with the immediate mortgage problem while a longer-term refinancing or sale strategy is put in place.
Help With a Controlled Sale
If keeping the home is not realistic, family assistance may provide enough time to sell the property yourself rather than allowing the lender to control the sale process.
Family Does Not Necessarily Have to Pay Off the Problem.
Homeowners sometimes assume that asking family for help means asking someone to come up with tens or hundreds of thousands of dollars. That is not necessarily the case.
Sometimes a smaller contribution changes the numbers enough to make refinancing possible. In other cases, another property, additional income or participation in the new financing may create an option that did not exist when we looked at the homeowner alone.
Funds can be used to reduce arrears, legal costs or the amount that needs to be refinanced.
A family member's participation may help with qualification where the lender permits a co-borrower or guarantor.
Another property with sufficient equity may potentially provide additional security for the lender.
Even temporary assistance may provide time to put a proper refinancing or sale strategy in place.
First, We Need to Know How Big the Gap Actually Is.
Before asking family to contribute anything, it makes sense to determine whether there is a viable financing solution and exactly what would be required to make it work.
What Is the Home Worth?
The current property value is critical because it determines how much equity may be available to support new financing.
How Much Is Owing?
We need the current mortgage balance plus arrears, legal costs, property tax arrears and any other registered debts or liens that may have to be paid.
How Much Equity Is Left?
Once the property value and total debt are known, we can determine whether there is enough equity for an alternative or private lender to consider the file.
What Is Preventing Approval?
Sometimes the issue is loan-to-value. Sometimes it is income, credit or the urgency of the Power of Sale. We need to identify the actual obstacle before deciding how family can help.
What Can Family Contribute?
Once we know what is missing, we can determine whether cash, additional income, credit support or equity in another property could realistically change the outcome.
What Is the Exit Strategy?
Saving the home today is only useful if there is a realistic plan for tomorrow. Any short-term mortgage solution needs a clear path to refinance, repay or eventually sell the property.
Tell Us What Resources Are Available Before Deciding There Is No Solution.
If family is willing to help, tell us. Cash, income, credit or equity in another property can sometimes materially change what is possible. We can look at the complete picture and determine whether that help actually creates a workable mortgage solution.
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