Sponsored by Northwood Mortgage Ltd. License #10349

The 5 Myths Of A Power Of Sale

The 5 Myths Of A Power Of Sale

Power of sale occurs when a homeowner cannot make their mortgage payments and the property goes into foreclosure. Instead of giving the property away, the bank or the lender which provided the mortgage is able to sell the property to make back their lost money. If you’re thinking of purchasing a foreclosed property through power of sale, there are five myths associated with it that are debunked below.

  1. The deal is always final

    This is one of the biggest myths surrounding power of sale. Unless specified in the purchase agreement, the bank or lender has the right to cancel the deal you made if the power of sale property’s owner catches up on their mortgage payments before the deal closes. You should consult a lawyer before signing the purchase agreement of a power of sale home and have a clause put in that says the deal must go through even if the POS property owner is able to make their mortgage payments again.

  2. Power of sales take no time at all

    Yes, power of sales take less time than traditional home sales but that doesn’t mean they happen overnight. There are still legalities and paperwork that must be completed before you take ownership of the property.

  3. Properties are sold for under market value

    When it comes to power of sale properties, they may seem like a great deal but in fact, they’re being sold for what they’re worth and not under market value. Power of sale properties still have to be listed on the MLS system and appraised by accredited appraisal professionals.

  4. You can ask for repairs to be done

    When you buy a home through traditional means (not a property that has been foreclosed) you’re entitled to let the sellers know that the roof is slanted (or any other issue) and you won’t buy the home until it’s fixed. With a power of sale property, you have to buy the home as is. You can’t tell the seller, in these cases it’s usually a bank, that you need repairs done before you purchase. Whatever condition the power of sale home is in, that’s the condition you buy it in.

  5. There are foreclosure properties in abundance across the country

    The foreclosure rate in Canada is actually very low. Only about 1% of mortgages in this country are in arrears (lack of payments being made) because our mortgage lending guidelines are a little stricter than those of our neighbours to the south. Here in Canada, mortgages are usually only given out to those who will be able to pay back them unlike in the United States where approximately 13% of mortgages are in arrears. That’s not to say that you won’t be able to find a power of sale property to purchase in Canada but there aren’t that many.

Before you decide on purchasing a power of sale property, consult a mortgage broker. Although, it may seem like you’re going to get a great property for cheap, it’s not always the case. A mortgage broker can help you decide if this is worth it and recommended a realtor.


Canada’s mortgage website

Your home is your most valuable asset. It is probably the single largest investment you will make in your lifetime. Your home is more than a place to rest your head and raise a family. Your home contains equity. It is a treasured resource and in some cases, can even be used as an ATM (aka cash back mortgages and HELOCs – don’t worry we’ll get there).

We All Need a Mortgage

Everyone who is looking to purchase a home will need a mortgage. But, what is a mortgage exactly and why do you need it? Besides being the term to describe a loan secured by real estate, a mortgage allows you to access funding to procure your dream home.

Mortgage Blog

Everything You Need to Know About...

If you are interested in procuring a mortgage in Canada, then your credit score may have an impact on whether or not you qualify. Read More

Advantages of Having an...

If you are thinking of investing in a house of worship, then you will need to obtain an institutional mortgage in Canada. Read More

Investing in an Income Property

If you have recently come into some money or would like to invest your hard-earned money into a lucrative business venture, then investing... Read More

Everything You Need to Know About...

If you are planning on moving to a new home, then you may not be able to cover all of your expenses at once. Read More

people a month

Trust us to help them save money
and make better financial decisions.

Join the monthly newsletter for financial tips, news, and deals!

Mortgage Reminder

Enter Your Renewal Date:

Please select the Circle and click the SUBMIT button.

Northwood Mortgage

We're working harder for you