Bankruptcy and Consumer Proposals happen.
Sometimes life throws you a financial curve ball.
It doesn’t mean your life is over, and it doesn’t mean you won’t ever qualify for a mortgage again.
It is however, absolutely vital that to 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.
Mortgage financing post bankruptcy is possible, it’s just different than your standard mortgage financing process.
The following are things that you need to take into consideration if you are in a previous bankruptcy or consumer proposal scenario, and you wish to qualify for a mortgage.
- Firstly, financing will be dependent on how long it has been since you were discharged from your bankruptcy, or how long since you completed your consumer proposal. Most lenders want to make sure that you have been discharged, because this means that everyone that you owed to in the past, have confirmed that they will not be coming after you.
- Secondly, the type of financing you will qualify for will be vitally dependent on how you have been re-establishing your credit since your discharge date. Also what matters is the type of credit that you have. While a $700 Visa is a good start, a $5000 Line of Credit carries a little more weight. Most mortgage payments are between $1,500 and $3,000 these days. If you can demonstrate that you can handle a higher credit limit, it provides the lender with more confidence that you will be able to handle making your mortgage payments.
A mainstream lender will want to see a minimum of the following before they will consider you for a mortgage. You must be discharged for at least 2 years, have at least a 5% down payment from your own resources (10% is preferable more recently), 2 years of credit established through 2 trade lines with a minimum credit amount of $2500 each, and no late or missed payments on these newly established trade lines..
This would be the bare minimum to qualify.
We also have access to some alternative lenders that will consider extending a mortgage to clients that have a larger down payment and who may not meet all of the criteria laid out above.
A down payment ranging between 20%-25% minimum is required. You can also expect that interest rates will be a little higher than with 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. Please don’t hesitate to contact me anytime. I would love to help outline your financing options and give you a plan so that you can get a mortgage post bankruptcy.