This should come as no surprise, but sometimes life throws you a financial curveball. Bankruptcy and consumer proposals happen. It doesn’t mean your life is over, and it doesn’t mean you won’t ever qualify for a mortgage again. The key here is to get a plan in place and show that you’ve got things under control. You must be able demonstrate to anyone considering you for financing that what happened in the past won’t happen again in the future. Here, we talk about getting a mortgage post-bankruptcy.
What’s the first step?
Mortgage financing post-bankruptcy is possible. It’s just different than your standard mortgage financing. Therefore, you will need to consider the following:
- Firstly, financing will be dependent on how long it has been since you were discharged from your bankruptcy. Alternatively, how long since you completed your consumer proposal. Most lenders consider the discharge date on both to be your new ground zero.
- Secondly, financing will be dependent on how you have been re-establishing your credit since your discharge date. Also, how in depth that credit is. A $700 Visa is nice, but a $5000 Line of Credit carries a little more weight.
How do I qualify?
In order to qualify for mortgage financing with a mainstream lender, they will want to see a minimum of the following before they will give you a mortgage. You must be discharged for at least two years, have at least a 5 per cent down payment from your own resources (although 10 per cent is a safer bet), two years of credit established through two trade lines with a minimum credit amount of $2500 each, and no late or missed payments. This would be the bare minimum to qualify.
As mortgage professionals, our job is to provide solutions and strategies for our clients. As such, we have access to lenders who aren’t mainstream. These alternative lenders will consider extending mortgage financing when clients have a larger down payment. You’re looking at a 20 to 25 per cent down payment minimum, and the interest rates will be a little higher than mainstream lending. Alternative lending isn’t for everyone, but it’s a great solution for some, especially those who have gone through a bankruptcy or consumer proposal.
So whether you’re looking for a plan to help you qualify for a mortgage with the most favourable terms, or if you need something more immediate, give me a call at (705) 333-4338 or get in touch with me here!