Can you get a mortgage after filing for bankruptcy?
Filing for bankruptcy is not something you should take lightly. While it may offer financial relief from your debts, it will impose challenges for future borrowing needs.
Bankruptcy Defined: If you are unable to meet your debt obligations, you may apply for Bankruptcy which is a legal process by which an individual or business is relieved from their debts by court order.
More information from the Government of Canada offered by clicking here.
It is not impossible to qualify for a mortgage after a bankruptcy as long as you know what to do. Many traditional mortgage lenders such as banks and credit unions will review a mortgage application 2 years after being discharged from bankruptcy.
The first thing a lender will do is review your credit bureau to see if you have a good credit history since being discharged.
Because of this, it’s important that you establish at least two types of credit after discharge. For example, two credit cards (and use at least once per month), auto loan, line of credit, cell phone account.
This demonstrates that you are now on the right path and able to manage your debts and finances responsibly. If there are any late or missed payments within two years of being discharged, it’s highly unlikely that a traditional mortgage lender will approve your application.
Qualifying For A Mortgage After Being Discharged From Bankruptcy
If you don’t want to wait 2 years after being discharged to apply for a mortgage, you still have options.
Alternative mortgage lenders known as “B” lenders and private lending institutions WILL review your application as soon as one day after discharge.
We have access to products and programs which are specifically designed to help you with homeownership sooner rather than later.
Since alternative mortgages are more expensive than bank mortgages, the terms are usually one to three years. This allows you to enter the housing market while you continue to rebuild your credit.
For more information on alternative or home equity loans, read: How Much Do Home Equity Loans Cost?
After a couple of years, the goal is to then qualify and move your mortgage to a lower-cost product offered by a bank or credit union.
Bankruptcy is available to us as a tool to use if needed. If you’re not sure what to do, we encourage you to speak with a Bankruptcy and Insolvency Trustee. They are experts and will review your case and provide you with many alternatives outside of bankruptcy or consumer proposal.
We have a free in-depth guide on how to improve your credit in 30 days. For a copy, simply email info@goatmortgages.ca with the subject line “Credit Repair Kit”.
Please call us at 604.334.8993 with any questions on how to qualify for a mortgage after bankruptcy and we will be happy to help.
