Why are they different?

When a homeowner can no longer pay their mortgage, two significant legal processes can come into play: Power of Sale and Foreclosure. Your lender can take legal action to force the sale of your home because a mortgage is a form of secured debt with your property as collateral. They can recover the unpaid debt by repossessing your home and selling it on the open market.

Always read the fingerprint of any mortgage commitment to be sure which process your lender will use in the event of default. Power of Sales are more common in Ontario however, foreclosures are still possible.

There are some differences between them, especially regarding how the home's equity is used. Understanding the key differences between these two is crucial.

Power of Sale:

• Typically, it is faster than foreclosure.

• Allows lenders to sell the property without lengthy court proceedings.

• The homeowner retains the right to any sale proceeds exceeding the debt owed and costs incurred.

Foreclosure:

• Often, it is a slower process as it involves going through the court system.

• The lender takes full ownership of the property, which means all homeowner's rights are extinguished.

• Any excess proceeds from the sale after debts and costs go to the lender, not the homeowner.

While both methods ultimately lead to the loss of a home when a borrower defaults on their mortgage, the implications for the homeowner’s finances and future housing prospects can be quite different between Power of Sale and Foreclosure.

The Main difference to be aware of is how the sale proceeds are divided. In a power of Sale, the homeowner retains the right to any sale proceeds exceeding the debt owed and costs incurred. In a Foreclosure, any excess proceeds from the sale after debts and expenses go to the lender, not the homeowner.

As a Buyer, looking for these types of sales might benefit you. Although the number of distressed sales has fallen over the years, they still come up on the market occasionally. Although most people are attracted to price, some risks are involved when purchasing a Power of Sale or Foreclosure property. The main risk is that these properties usually hold no warranty or disclosures since the seller hasn’t lived or knows much about the property. 

We at Unna Real Estate Group are always on the lookout for distressed Properties for our clients, and you can be too by accessing our VIP section of our website. Here, you can search thousands of properties and access sold data and neighborhood reports. 

Reach out to us anytime with any questions or concerns; we're always ready to chat.

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Laneway & Garden Suites in Toronto

(Laneway & Garden Suites… What are they? Why are they becoming so popular?)

The housing crisis in the Greater Toronto Area, particularly in the city's core, persists despite market changes, with property values remaining high and homeownership challenging for many.

In response to financing challenges, homeowners have explored options like secondary units to generate extra income for mortgage support, with basement or second-floor apartments traditionally being popular choices.

The Changing Lanes Program introduced by the City of Toronto in 2018 allows homeowners to build Laneway Suites, providing new rental housing options within established neighbourhoods.

A Laneway Suite is a self-contained residential unit situated on the same lot as the main house, typically located in the backyard next to a public laneway, offering additional housing choices.

The Changing Lanes program simplifies the process for homeowners to construct a laneway house without the need for various approvals, making it easier to enhance their property.

Homeowners interested in building a Laneway Suite can reach out to the City of Toronto to determine eligibility based on property criteria.

For properties without access to a laneway, the City of Toronto introduced Garden Suites in 2022, offering detached housing units in the backyard as an additional housing option.

Garden Suites, like laneway suites, provide smaller housing units that can accommodate family members or serve as rental units, aligning with the city's efforts to diversify housing options.

Both Laneway and Garden Suites contribute to various housing factors, increasing property value, expanding rental opportunities, and enhancing homeowners' financial flexibility.

These initiatives offer additional housing solutions and benefits to homeowners, tenants, and buyers in Toronto's competitive real estate market.

As always, different rules and regulations apply on every property, feel free to contact us to discuss this or any other Real Estate Related topic. 

Some Key Roles in the Real Estate Industry:

(Choosing your dream Team that works for you)

When it comes to your personal Real estate journey, it is usually the most important decision you make in your whole life. Although we at Unna Real Estate Group buy and sell real estate every day, we understand that this process is very important to you and can sometimes be confusing to get started. 

At Unna, we believe that choosing the right team of professionals is key to making sure that everything is a success. We have compiled a list of other Real Estate professionals who are usually involved in a real estate transaction. It is important that every single person in your team communicates with one another so you have a seamless experience.

• The Listing Agent:

  • Works with individuals selling real estate, listing properties under their name and brokerage for potential buyers to discover.

  • Responsibilities include determining selling prices, listing and marketing properties, managing showings, answering buyer inquiries, negotiating sale prices, and overseeing the sales process.

• The Buyer Agent:

  • Assists individuals looking to purchase real estate by finding suitable properties, arranging showings, negotiating on their behalf, and guiding them through the purchasing and closing procedures.

  • Typically, buyer clients do not incur costs for working with a buyer’s agent.

• The Broker:

  • Positioned above agents, brokers usually possess more education and licensing.

  • Brokers can establish their own real estate brokerage and recruit agents as salespeople.

• The Mortgage Lender:

  • Provides funds for mortgage loans, essential for real estate purchases.

  • Prospective buyers are advised to obtain pre-approval for a loan before engaging in property viewings and bidding.

• The Appraiser:

  • Independently assesses property value, crucial for mortgage lenders to ascertain accurate property valuations.

  • The appraiser's role is vital to ensure the property’s value aligns with the contracted sales price for loan approval.

• The Inspector:

  • Hired by potential buyers to assess property structure, safety, and potential defects or damages.

  • Inspectors play a critical role in informing buyers of any issues that may affect the property's condition.

• The Closing Attorney (The Lawyer):

  • A real estate attorney specializing in real estate law, providing legal guidance during property transactions, particularly at the closing stage.

  • These attorneys assist buyers and sellers in understanding and navigating the legal documentation involved in real estate transactions.

New Content: Lower Monthly Payment or Paying More Interest?

Introduction: sConsidering buying a home? Picking the right mortgage term is crucial. In Canada, the standard is a 25-year amortization, but 30-year terms are gaining popularity due to rising interest rates. Starting August 1, 2024, first-time home buyers can opt for 30-year terms for newly built home, Understand the new rules:

If you're not a first-time buyer, you can still get a 30-year mortgage with a 20% down payment or by choosing an uninsured mortgage. Unsure about term length? Think about whether you want lower monthly payments or are okay with paying more interest over time.

1. Advantages and Disadvantages of a 30-year Mortgage Term:

   • Pros: Lower monthly payments make homeownership more affordable, especially for younger buyers. Increased borrowing power.

   • Cons: Higher total interest payments over the mortgage's life.

2. Impact of the New Rule on the Canadian Housing Market:

   • This rule change could stimulate demand for newly built homes, potentially boosting construction activity. However, it may also artificially inflate prices if demand outpaces supply.

3. Eligibility Criteria for a 30-year Mortgage with Less than a 20% Down Payment:

   • Currently, a down payment higher than 20% is required for a 30-year mortgage. With the new rule, first-time homebuyers can choose this option even with less than 20% down, but it's limited to newly built homes.

Our Opinion: The government should extend this option to all homebuyers, regardless of property type. This would promote affordability and accessibility in the housing market.

"Click the link below to schedule a personalized 1:1 call with us and explore the best options for you. If you're considering purchasing new construction, sign up for our newsletter to stay updated on all projects in Toronto and the GTA."

In response to the challenges faced by young Canadians in saving for their first home, the government has proposed significant changes to the Home Buyers' Plan (HBP). These changes include increasing the withdrawal limit and extending the repayment grace period, aimed at easing the path to homeownership for first-time buyers.

Understand: Let's break it down:

1. The Problem: Young Canadians often struggle to save enough money for a down payment on a house and to qualify for a reasonable mortgage.

2. The Solution - Home Buyers' Plan (HBP): The government has a program called the Home Buyers' Plan (HBP) which lets you take money out of your retirement savings (RRSPs) to buy or build a home.

3. Current Limits: Right now, you can withdraw up to $35,000 from your RRSPs under the HBP to put towards buying a home.

4. Proposed Change: The government wants to make it easier for people to buy their first home. So, in the proposed Budget 2024, they suggest increasing the limit from $35,000 to $60,000. This means you could take out more money from your RRSPs to use towards buying your home.

5. Extended Repayment Grace Period: Also, if you've taken money out of your RRSPs under the HBP between January 1, 2022, and December 31, 2025, the government wants to give you more time to pay it back. Normally, you have to start paying back the money within two years, but with this proposal, they're extending that grace period to five years. This way, you have more time to focus on paying your mortgage and getting settled in your new home without the added pressure of repaying the RRSPs.