Here’s a real talk: If nobody will even loan you money for a cup of coffee, how can you expect someone to give you a mortgage to own a house?
Is it possible to come back from that kind of credit meltdown, one that pushed you to declare bankruptcy? The simple answer is yes, but it will take time.
It may look counterintuitive, but for most people, filing a bankruptcy or a consumer proposal could be the best way to home ownership. There are people who carry a lot of unsecured debt where it is hard to carry that credit and save money to purchase a property.
Declaring bankruptcy or filing a consumer proposal allows a person to lessen the debts immediately and come up with a customized payment plan.
Let’s say someone owes $60,000 plus interest on their credit card, then they do a consumer proposal for $21,000 less the interest and the money they are saving will let them save more money to buy a house. To know more about your options, mortgages info from NPBS can help you assess your current capability and eventually get a personalized loan that matches your capability.
There’s no beating behind the bush here. Your credit rating is a key factor in whether a bank will loan you money. And bankruptcy won’t sit well with their decision. HOWEVER, lenders will also assess your down payment relative to the value of the house in contrast to what you are presently earning.
A person with a number of unsecured debts may have a better rating and chance of approval because they’ve managed to stay afloat, but could be regarded as a big risk when it’s time to loan for a property because of their weak financial position.
Reestablishing your credit can be a bit harder. One trick is to start with a car loan. This works because banks will be more willing to lend the money because they know where you are investing your money.
Bankruptcy records stay with the credit bureau for six years after they are discharged and they could stay on record for eight years, the added two being the period to pay back the debt agreed to at the proceedings.
Here’s another tip: Never forget to pay your credit card payments after declaring bankruptcy. If you do, then you have shot yourself in the foot with the majority of lenders. You need to have your home as well as get to your work in order to pay those debts.
There are some lenders who “up charge” or increase your interest rate until a bankruptcy falls entirely off the credit report. You still need reasonable debt limits and a good paying job, but the key here is making sure you have a flawless record while missing no payments whatsoever – even the smallest debt.
A word of caution my friend. Never fall into a second bankruptcy. That’s about as bad a credit risk as you can get. It will take you to the world of non-prime lenders. But let’s reserve that issue for another day. For now, remember these tips and you should be fine. What’s left for you is to find a home you want – and stick to the rules. Good luck!