- Get Discharged
Once you have been discharged from bankruptcy for at least two years it will show that you are now free from the financial issues that you were facing.
- Look at Your Credit Report
Just because you have received your discharge papers it doesn’t necessarily mean that your credit is cleared up. Mistakes can be made that will result in a misleading credit score. Take a look to ensure that everything that was included in your bankruptcy has been removed. Request a free copy of your credit report from Equifax. If you find that some errors have been made they can be cleared up once you send them your discharge papers.
- Accumulate New Credit
Now that you essentially have a fresh start, it’s time to re-establish your credit. In order to prove yourself worthy of obtaining a mortgage you will need to acquire two to three new forms of credit. A secured credit card totalling $1,000 GIC or more will suffice. Credit carrying forward prior to bankruptcy however will not apply. Each situation can be different though so it’s important that you speak with your mortgage specialist about some of alternative options to gaining new reporting credit. After 12 months of re-established credit (two years discharged) and no missed payments you’re well on your way toward securing a mortgage.
It’s also important to note that while you are in the process of re-establishing your credit you actually need to use the credit in order for your score to increase. Just be sure to never let that balance exceed 50% of your limit.
- Save for a Down Payment
Begin saving for your down payment as soon as possible. Five per cent of the home’s value would be the absolute minimum required.
- Get Pre-Approved
Congratulations on working so hard to re-establish your credit! You are now ready to get pre-approved for a mortgage so that you can begin searching for your home!
After being discharged from your mortgage for two years and gaining at least a year of re-established credit you are now eligible for low interest rates. That’s right - you are now able to get the best mortgage rates possible provided that your mortgage is insured with the Canadian Mortgage and Housing Corporation (CMHC).
A blog cannot deal with all aspects of a subject and is not intended to replace professional advice. It's purpose is to highlight information and identify areas of possible interest. Anyone wishing to discuss this blog or to make any comments or suggestions about this blog is invited to do so by either posting comments or emailing me directly.
Curious about whether or not you will be able to obtain a mortgage after bankruptcy? You may be surprised to find that it isn’t that difficult provided that you do all of the following:
Contact a mortgage professional for advice or pre-approval and they will help find the right mortgage for you and your needs!