The looming new interest rate hike is adding financial pressure to some homeowners — if that’s even possible. Are they at risk of losing their homes, stretched thin and suffocating with payments?
First, you should know that lenders, financial institutions, are not interested in closing houses for sale in their hands.
“As we have been doing since the beginning of the inflationary period, we will continue to support members and clients facing financial difficulties,” explained Desjardins spokesman Jean-Benoit Turcotti. Among other things, we contact our members who have a variable rate mortgage and whose payments are insufficient to cover the interest. »
In short, as a first attempt, the lender and borrower try to find a payment agreement.
If this is impossible, the creditor may actually initiate foreclosure proceedings. This is possible as soon as a payment is missed – but financial institutions are usually more tolerant. If four missed payments and communication breaks down, the banker often loses his patience.
But we’re not there yet, says Damien Charbonneau, co-founder and chief operating officer of online mortgage brokerage agency Nesto.
“We don’t really have to worry about the Bank of Canada’s key rate hike,” he said, adding that Nesto currently sees no potential recovery in its portfolio.
“We are not facing a disaster scenario,” he said.
For repossession to increase significantly, a specific context is required in which job losses are combined with declining property values. However, says Damien Charbonneau, this is not the case.
A well structured approach
The process of foreclosure by the bank is called foreclosure process. If it is triggered, the owner-borrower will receive a notice from his bank or credit union informing him that the process has begun.
What can he do?
Challenge it in court by submitting a statement of defence.
Sometimes a mortgage loan agreement contains a sale clause if payments are not made. For the creditor, this makes recovery easier: the power of sale allows him to proceed without going through the courts – especially if he already has your contract.
Upon repossession, homeowners have one month – 30 to 35 days – to vacate their home.
If an owner finds himself in such a difficult situation, he has every advantage of selling his home himself, reminds Damien Charbonneau. “Most people have equity in their home,” says the Nesto co-founder. By selling, they can pay off their mortgage and buy a more modest property, or find a place to live.