What Costs Get Added During a Power of Sale?
The amount you owe can keep increasing after a Power of Sale starts. Missed payments are only part of the picture. Interest, legal fees, enforcement expenses and other costs can also be added and reduce the equity you have left in the property.
← Back to Power of Sale QuestionsThe Balance Can Grow While the Enforcement Process Continues.
Once a mortgage is in default, the lender may be entitled to add certain amounts to the mortgage debt. The exact figures depend on the mortgage, the lender and what enforcement work has already been done.
Missed Mortgage Payments
The unpaid regular payments remain owing and form the starting point of the arrears.
Accrued Interest
Interest can continue to accrue while the mortgage remains unpaid, so the balance can increase over time.
Lender Legal Fees
Once the lender has instructed a lawyer, recoverable legal fees may be added to the amount owing.
Enforcement Expenses
Depending on the stage of the file, the lender may incur other permitted enforcement-related expenses that can also be charged back.
Property-Related Costs
If the lender has to protect, inspect, appraise, insure or otherwise deal with the property, certain costs may become part of the enforcement account.
Property Tax Arrears
Unpaid property taxes can affect the overall amount that has to be resolved and can further reduce the equity remaining in the property.
Every Added Cost Comes Out of Your Equity.
If the property is worth more than the mortgage debt, that equity is often what gives you options. But the longer the enforcement process continues, the more that equity can be reduced by interest and costs.
That can make refinancing harder and can also reduce how much money you ultimately keep if the property has to be sold.
Missed payments and ongoing interest continue to increase the amount owing.
Each additional enforcement step can create more legal work and additional expense.
The larger the debt becomes, the less equity remains available for refinancing or for you to keep after a sale.
Acting earlier can preserve more options and more of the equity you still have.
We Need the Current Numbers — Not an Old Mortgage Balance.
When we assess a Power of Sale file, we need to know what is owing now, including the lender's current enforcement costs and any other amounts that may have to be paid out.
Current Mortgage Statement
A recent statement gives us a starting balance and confirms the lender and mortgage details.
Notice of Sale
The Notice of Sale and related legal documents help establish the enforcement stage and amounts being claimed.
Lender or Lawyer Payout Figure
Where available, the lender's current payout or reinstatement figure provides the most useful picture of what actually has to be resolved.
Property Tax Information
We need to know whether property taxes are current or whether arrears also have to be dealt with.
Other Registered Debt
Second mortgages, judgments, liens or other registered claims can affect the total amount that must be addressed.
Current Property Value
An appraisal is generally required if refinancing is part of the solution because we need to know how much equity is actually left.
Waiting Can Make the Problem More Expensive.
The longer a Power of Sale continues, the more opportunity there is for interest, legal fees and other enforcement expenses to increase the debt. If there is still equity in the property, acting sooner can help preserve more of it and keep more financing or sale options open.
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