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.
Mortgage financing after bankruptcy is possible; it’s just different than your standard mortgage financing in that the following considerations must be taken into account. 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 consider the discharge date on both to be your new ground zero
- how you have re-established your credit since your discharge date. A $700 Visa is nice, but a $5000 Line of Credit carries a little more weight.
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 2 years
- have at least a 5% down payment from your own resources (10% is a safer bet)
- 2 years of credit established through 2 trade lines (credit accounts) with a minimum credit amount of $2500 each, and no late or missed payments.
This would be considered the bare minimum to qualify for a PRIME mortgage.
If you don't quite fit the criteria above, don't worry - we aren't mainstream either. We will consider extending mortgage financing when clients have a larger down payment. If you have at least 20%-25% for a down payment, and can accept the interest rates will be a higher than mainstream lending, an alternative mortgage might work for you. Alternative lending isn’t for everyone, but it’s a great solution for those who have gone through a bankruptcy or consumer proposal and haven't quite met the requirements listed above.