- A Notice of Sale is not the end of the process. It starts a defined period in which the default can be cured.
- The mortgage can be reinstated by paying the arrears and permitted costs, not necessarily the whole balance.
- Selling privately before the lender sells frequently preserves more equity.
- The redemption period runs whether or not it is used.
What the notice actually is
A Notice of Sale is the formal step a lender takes after default before it may sell the property. It must be in the prescribed form and served on the borrower and on every party with a registered interest.
It sets out the amount required to bring the mortgage back into good standing, and the period in which that may be done.
It is not a court order and it does not transfer anything. It is notice that the lender intends to sell if the default is not cured.
The two ways to stop it
Reinstatement. Paying the arrears together with the lender’s permitted costs within the redemption period. The mortgage then continues on its original terms. This is often less than borrowers assume, because it is the arrears rather than the whole balance.
Redemption. Paying out the mortgage in full, usually by refinancing or selling.
Refinancing after a Notice of Sale is harder and more expensive than before one, which is a reason to act at the first missed payment rather than at the notice.
Selling before the lender does
Where reinstatement and refinancing are both out of reach, a private sale usually produces a better price than an enforcement sale, and the surplus belongs to the borrower.
It requires the lender’s cooperation on timing. Lenders will frequently allow it where the payout is credible and the process is moving, because their objective is recovery rather than ownership.
This is the option most often missed, because by the time the notice arrives people have stopped opening the letters.
When the notice itself is defective
A notice served before the statutory waiting period has run, served on the wrong parties, or containing an unsupportable arrears calculation may be challengeable.
That is a narrower argument than most borrowers hope. It can buy time and occasionally more, but it is not a substitute for a plan to pay.
Where a notice looks irregular it is worth having it reviewed promptly, because the redemption period continues to run while the question is considered.
Common questions
How long is the redemption period?
A prescribed period applies under the Mortgages Act. The notice should state it, and the dates should be confirmed rather than assumed.
Can I just pay the missed payments?
Reinstatement generally requires the arrears plus the lender’s permitted costs. It is usually less than the full balance.
Will this affect my credit?
Mortgage default and enforcement are reported and have a significant effect. That is a reason to resolve it rather than to ignore it.
Can the lender sell for whatever it likes?
No. A lender must take reasonable care to obtain the true market value, and a sale below that can be challenged.
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