Obtaining A Mortgage After Bankruptcy

Obtaining A Mortgage After Bankruptcy Isn’t As Problematic As You Think

Bankruptcy is on the rise in Calgary, with 8.5% more bankruptcies filed during the first quarter of 2019 compared to the same period of 2018. The Edmonton Journal reports that locals are finding it difficult to make ends meet and, as a result, are losing their personal possessions, including their cars and homes. But even if you do lose your home following your bankruptcy filing, it doesn’t mean that you can’t take out a mortgage and become a Calgary homeowner again in the future.

Get discharged 

In order to qualify for a mortgage so that you can purchase a home in Calgary, your bankruptcy will need to be discharged. This means that you will have met the terms of the discharge which typically include paying back some of what you owe. The Canadian government stipulates that if you have $200 surplus income per month, then 50% must be paid to your creditors. A bankruptcy of this type will typically last 21 months before the discharge is issued. By following the rules of your bankruptcy, you’ll show that you are responsible with your cash and want to pay back what you owe. At this point, avoid debt management companies as they have a high failure rate and can draw out your bankruptcy longer, thus preventing you from getting back on the property ladder.

Rebuild your credit 

Once you’ve been discharged for two years, you are eligible for a mortgage on your dream Calgary home. To ensure that it is a success, you’ll need to boost your credit. The longer you spend building your credit up, the better it will be when the time comes to apply for a home loan. Credit cards are a great way to improve your credit, but you must ensure that you are sensible with your lending and pay back the full amount every month, otherwise, you risk damaging your credit further. Ideally, two years’ worth of credit is required to get a competitive rate on your mortgage, but there’s no need to worry if you don’t quite make the mark.

Start saving 

As a general rule, you’ll need at least a 5% down payment on any property in Calgary that you wish to buy. Some mortgage companies will also consider you if you have a larger down payment but haven’t yet been discharged for two years or can’t show two years of credit. Either way, you’ll need to save hard if you want to put your bankruptcy behind you for good. One way to do this is to open a bank account which doesn’t have any fees and has a decent interest rate. Setting up a standing order so that a sizeable sum of cash regularly goes into the account is recommended, too.

Shopping for your new Calgary home 

When the time comes to shop for a new home, you need to carefully consider which type of property you require. Always ensure that you will be able to comfortably pay the mortgage repayments, household running costs, and additional expenses on the property that you’re thinking of buying. This may mean you opt for a property smaller than what you previously owned. A realtor which has a variety of properties on its books can offer a surge of advice and will happily discuss your requirements and show you multiple properties to help you find your perfect home. 

Many people think that when they’ve been declared bankrupt they can’t become a homeowner again. Thankfully, this belief is incorrect and it’s possible to obtain a mortgage and get the keys to a Calgary property within just a few years of bankruptcy occurring.