Bankruptcy is one experience none of us would wish for in life. Once it’s been dealt with, a person is left with questions about the long term effect of their ability to be approved for a mortgage.
While it may feel like it’s not possible to recover financially, there can be a light at the end of the tunnel when you have the right information. The basic rules are: you must be discharged from your bankruptcy for two years, and you should re-establish two credit lines from the day of discharge.
A credit card, loan, line of credit or any combination of these for 2 credit lines is required. Lines of credit can be hard to get for those who have been through bankruptcy as lenders generally give the lower interest rates to those clients in good financial standing. Securing a loan for an RRSP is another option which re-establishes some credit while helping to build some savings for yourself. Lenders need to see those who have been through bankruptcy have learned a lesson and have some savings in place as well. Some lenders may not be open to extending credit at all, so just be persistent until you find those who will.
When applying for a mortgage, going in with a bigger down payment (10% rather than 5%) lowers the risk of default by half in the eyes of the lender. Be sure to stay on top of minimum payments as the last thing you want is any 30 day late payments showing up on your credit history. This doesn’t mean you shouldn’t use your credit cards; you should use them at least once a month, even for a small amount, while still keeping the balance below 50% of the credit limit.
Finally check your credit report for mistakes! Often lenders fail to remove the balance following discharge. You can recover after a bankruptcy and even qualify for a mortgage with my help. Contact me when you’re searching for a mortgage agent in Brampton.
