Julie Wildman, CA, MBA - Client Service Specialist
Many people wonder – “If I file for bankruptcy, can I still get a mortgage?” Yes, you can.
If you apply for a new mortgage after bankruptcy, the mortgage lender will want to make sure that you are qualified for the mortgage and that you have been working to re-establish your credit.
How do you do this? One of the easiest ways for you to re-establish credit and gain a credit history after your bankruptcy (what mortgage and other lenders are looking to see) is by getting a secured credit card. What this means I that you give the bank/credit card company $500 (for example), and then they give you a card with a $500 limit. They keep your $500 on deposit in case you don’t make payments on the card they gave you. Just getting the card isn’t enough – you must use it, and most importantly, make sure you pay it off every month. Buy your groceries on the card, then go home and pay off the amount right away. The use of the card and payment of the bills is how you re-establish your credit. The card will show up as a normal credit card on your credit report and so long as you are paying the balance off, it will show up with a positive credit rating – and you’re on your way to re-establishing your credit.
Also keep in mind that “cash is King”. When you are going to apply for a mortgage, having a good down payment will go a long way. After your bankruptcy, save some money. If your goal is to buy a home, you may want to put some of that savings into an RRSP, especially if you are a first time home buyer. In Canada, the first time you buy a home, you may borrow $20,000 from your RRSP savings to use as a down payment on your home.
Check out some of our tips on mortgages.
Also, as many people may know, mortgage rules changed last year for Canadian homebuyers. Here’s a short clip about the new rules:
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