Mortgage After Bankruptcy: Problems, Potential and Possibilities

Can I get a mortgage after bankruptcy? Maybe.

What do I have to be aware of?

Will my interest rate be high?

My thought process over my career has certainly changed with the subject of bankruptcy. Working in the early years with the banks, I was taught that bankrupt clients were generally bottom-feeders. Experience has taught me otherwise. Over my career, I have had clients who put all their funds to research cancer, been in horrific car accidents, lost their jobs, lost their business, or have been a part of costly divorces. In my experience, 95% of my past clients had legitimate reasons for having excessive debt. At Robert Floris and Sean Howard’s Mortgage Architects office, we want to offer advice and hope for those who have experienced insolvency issues. We will explore the problems and possibilities of getting a mortgage after bankruptcy.

Problems After Bankruptcy:

1. Some lender will not provide a mortgage until 7 years after a bankruptcy discharge.
2. You cannot apply for new credit until a discharge is issued, which is a permanent court order that releases an individual from personal liability for certain types of credit. In other words, all the old money owed must be officially forgiven from creditors.
3. Getting credit can be difficult after insolvency.
4. If your home was involved in the bankruptcy, it becomes much harder to get a mortgage.
5. It will take years and multiple sources of new credit to get established with building your credit score.
6. The first two years, your credit has to be perfect. Even one late payment is considered unfavourable.

Potential Possibilities of Getting a Mortgage After Bankruptcy:

1. Establish Credit Immediately after Receiving the Issued Discharge Statement. Financial institutions will not even review your mortgage application until you have two forms of new credit for two years. The easiest way is to get a secured credit card with a major bank. If this is not possible, lower rate credit issuers, like Capital One, Home Trust and Refresh Financial, are more hospitable in issuing new credit cards. Other forms of new credit are car loans and RRSP loans.
2. Using your Credit Wisely. Use the credit card every month. Do NOT use more than 50% of the limit. Pay on time – no mistakes allowed!
3. Continually Monitor your Credit. Equifax and TransUnion have programs to keep you updated on your credit score progress. Review them diligently to ensure accuracy.
4. Begin a Savings Program. Along with establishing credit, mortgage lenders will also review how much you have personally saved. The minimum goal is 5% of the purchase price. The ultimate goal is a 10% down payment.
5. After Two Years from Discharge, Your Home Search Can Begin. Find a professional mortgage broker or advisor who can advise your personal situation to guide you honestly and with long term intentions to begin your next chapter in life.

Declaring bankruptcy is one of the life events that can appear quite daunting, however as mentioned, most individuals are of good character and rebound quite well. It is not easy but it is manageable. Some of the great stories of our mortgage business is seeing clients rebound and thrive after insolvency issues. Although we are a small part of it, inside we feel big from helping others.

About Me:

Robert Floris has been in the mortgage industry for 30 years, including working as a Sales Manager for a major chartered bank. Over his career, he has personally lent over 1 billion dollars and proudly continues to advise and tutor his valuable clients.

Robert Floris has been in the mortgage industry for 30 years, including working as a Sales Manager for a major chartered bank. Over his career, he has personally lent over 1 billion dollars and proudly continues to advise and tutor his valuable clients.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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