Getting a Mortgage After a Bankruptcy or Consumer Proposal
Getting a mortgage with a prime lender post-bankruptcy or post-consumer proposal is still possible. Here are the things you need to do to make it happen.
Discharged for At Least 2 Years
Most prime lenders want to see that you have been discharged from a bankruptcy or consumer proposal for at least two years. They want the bankruptcy or consumer proposal to be in your past. The second you’re discharged from your bankruptcy or consumer proposal, you should take steps to rebuild your credit. If you still haven’t completed your bankruptcy or consumer proposal and have been discharged, you’ll need to wait longer.
At Least 2 Active Trade Lines
It’s not just being discharged from your bankruptcy or consumer proposal. Prime lenders want proof that you can handle debt post-bankruptcy or post-consumer proposal before approving you for a mortgage because if you can’t handle a simple credit card, how are you supposed to handle a much larger mortgage?
The simplest way to do this is to sign up for a couple of secured credit cards, each with a credit limit of at least $2,000. This will go a long way in rebuilding your credit.
No Missed or Late Payments
You need to be on your best credit behaviour. That means no missed or late payments. One missed, or late payment can get you disqualified from taking out a mortgage with a prime lender. This may seem extreme; however, the lender is taking a more significant risk by offering you mortgage financing since you have already defaulted on debt (even if it’s through no fault of your own).
Add reminders to your calendar or set it so that your credit card is automatically paid each month. Please do what you need to do; never miss any payments because it could cost you dearly.
No Double Bankruptcy or Consumer Proposal
If this isn’t your first time filing for bankruptcy or a consumer proposal, you’ll need to disclose this to the lender. This can make it a lot more difficult to obtain mortgage financing with a prime lender. Some prime lenders will outright refuse to offer mortgage financing to anyone who has filed a double bankruptcy or consumer proposal. As such, it’s best to avoid filing for bankruptcy or a consumer proposal more than once in your lifetime, as it can make it a lot more costly to obtain mortgage financing in the future.
What if You Can’t Wait?
If you can’t wait, alternative and private lenders are willing to offer mortgage financing, but those can come at much higher rates and fees. That’s why it’s best to plan ahead and avoid them if you can if you don’t need to buy a property right away.
The Bottom Line
Are you looking for some custom help for your own situation? Reach out to our mortgage experts today and we’d be happy to review your situation one-on-one and help you get the mortgage financing that you deserve.