Can I Refinance Before the House Is Sold?
Potentially, yes. Receiving a Notice of Sale does not necessarily mean the property has already been sold. If there is enough equity and enough time to complete the transaction, refinancing may still be possible.
← Back to Power of Sale QuestionsIf the House Has Not Been Sold, There May Still Be Time to Refinance.
The important questions are whether the property has enough equity to support the required mortgage, whether a lender will approve the financing and whether there is enough time to complete everything before the enforcing lender moves forward.
Confirm the Property Value
A current appraisal is generally required. The property value determines how much equity is available to support replacement financing.
Confirm the Mortgage Payout
We need the current amount required to pay out the enforcing lender, including arrears, interest and applicable legal or enforcement costs.
Identify Other Registered Debt
Second mortgages, judgments, liens and property tax arrears can affect the total amount that has to be dealt with.
Calculate the Loan-to-Value
Once we know the property value and total amount required, we can determine whether the available equity fits an alternative or private lender.
Confirm the Timeline
The Notice of Sale and other legal correspondence help establish how far the lender has progressed and how quickly the refinance has to close.
Choose the Right Lender
If conventional bank financing is no longer realistic, an alternative or private lender may still consider the file based on the overall situation.
A Notice of Sale Does Not Automatically Mean the Opportunity to Refinance Is Gone.
A Notice of Sale is a serious enforcement step, but the financing question is whether the transaction can still be completed before the lender reaches the point where the property is sold.
That is why timing matters so much. A file that may be workable today can become much harder if valuable days or weeks are lost.
The property has to support the mortgage amount required to resolve the existing debt.
The appraisal, lender approval, mortgage instructions and legal closing all have to happen before enforcement overtakes the transaction.
The file still has to fit a lender's loan-to-value, property and underwriting requirements.
If short-term financing is used, there should be a realistic plan to refinance, repay or sell afterward.
The New Mortgage Has to Resolve the Existing Enforcement.
The objective is not simply to obtain another mortgage. The replacement financing has to provide enough money to deal with the enforcing lender and any other amounts that must be paid as part of the transaction.
Order the Appraisal
The appraisal establishes the property value the new lender will use when determining the available loan amount.
Obtain the Payout Figures
Current payout information is needed so the new financing can be sized correctly and the existing lender can be dealt with at closing.
Secure the New Approval
The new lender reviews the appraisal, required mortgage amount, borrower information and overall exit strategy before issuing an approval.
Send Mortgage Instructions
Once approved, the lender sends mortgage instructions to the lawyer handling the new transaction.
Complete the Legal Closing
The lawyer completes the required searches, obtains final payout figures and uses the new mortgage funds to complete the transaction.
Move Quickly
Even when the equity works, unnecessary delays can make the transaction harder to complete as the enforcing lender continues its process.
Do Not Assume It Is Too Late Just Because You Received a Notice of Sale.
If the property has not yet been sold, refinancing may still be possible. The real questions are whether there is enough equity, enough time and a lender willing to provide the financing required to resolve the situation.
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