Qualifying for a home equity loan with a bankruptcy or a consumer proposal is challenging. Here are a few essential things to keep in mind:
Consult a Mortgage Professional Before Filing a Consumer Proposal or Bankruptcy
If you already own a home, you may be able to avoid filing a consumer proposal or bankruptcy by using the equity in your home! If you are considering buying a new home, you should complete your consumer proposal or bankruptcy before taking on substantial new credit. This will give you time to get your financial standing in order, build your credit score, and accumulate a down payment.
Understand Your Mortgage Approval Options
You can get a standard rate mortgage from conventional lenders if it’s been two years since you’ve completed your consumer proposal or bankruptcy. Sub-prime lenders may approve you earlier, but their terms may not be as favorable.
Review Your Credit Report
Ensure your credit history is free of over-extended debt and take extra precautions to verify that no errors exist on your credit bureau files. Doing this will help ensure you have smoother financial transactions in the future.
Highlight Other Positive Factors
Home equity lenders may also consider whether you demonstrate other positive attributes, such as earning a steady income, the length of time you have been at your current address and if you have savings and other assets.
Get Expert Financial Counseling
Canadians can access qualified financial counseling as part of both consumer proposals and personal bankruptcy systems. This allows them to receive personalized advice and resources on credit best practices and other important financial topics.
There is no quick fix to repairing your credit score. Take the time to carefully consider your options and seek advice from a financial expert to ensure that you make the most appropriate decision for your current situation. Book a call with our mortgage specialists to learn more about your options.
