Buying a home after Bankruptcy

Buying a home after Bankruptcy

A great number of clients after their bankruptcy get declined for financing at their banks and have the mistaken impression that there is nothing to be done. It’s important to know that a number of banks will lend after bankruptcy. Here’s what they need to know.

Buying a home after bankruptcy is not the same as buying a home for the first time with no credit issues.

There are two main factors that banks will consider:

 - How long ago was their bankruptcy discharged?

 - How long has it been since they re-established their credit?

The mortgage options available to them depend on the answers to these questions.

In a nutshell, they will be looking at either a Mainstream Regular Bank or Alternative B Lender for a short tem period until they reestablish their credit and can be transferred to a regular bank.

Mortgage after bankruptcy with a regular mainstream lender

In order to qualify with a prime lender after bankruptcy, they need to fulfill the following criteria:

1. The down payment (5% minimum) must be from their own resources – either in a savings account, an RRSP, investment          account,and so on.

2. A minimum of two years needs to pass after the discharge of a bankruptcy.  

3. Must be able to show at least 12 months of solid, re-established credit.  1 major credit card and a loan or car lease well paid.

Mortgage after bankruptcy with an alternative B Lender

An alternative lender will work with the client as early as one day after their bankruptcy discharge, and with little or no re-established credit.  

Depending on their situation, the down payment will range between 20% and 35% at a slightly higher rate for a short term period of 1 to 2 years. The idea is to fix their credit and bring them back to a regular lender at competitive rates.

If you need any information on buying a property or if you would like to speak to a mortgage specialist for the opportunity to get on the path of acquiring a property, contact me Robert Clark Century21 UNIC (514) 660-1678