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My Mortgage Blog

We're all familiar with the domino effect; when an action sets off a chain of events. That can be the case with your mortgage today because of your previous credit history. 

Bankruptcy and consumer proposals are valid options for those who need to remediate their finances; be sure to discuss your options with a professional accountant, financial advisor, lawyer and bankruptcy trustee. After bankruptcy discharge or completion of consumer proposal, it is often believed credit history becomes a clean, blank slate. 

Past credit, including bankruptcy and consumer proposal can impact your future mortgage eligibility depending on the lender, the timeframe since those events and your actions after the events took place. 

That Past can Predict the Future

It's really important to disclose all past credit history to your mortgage professional because some lenders have policies that may make you ineligible for their products if you've previously filed for bankruptcy, or if one of their accounts was included in the bankruptcy or consumer proposal. One of the beauties of working with a Mortgage Broker is if that's the case, it may not be the end of the road...a broker has a number of other lenders available that may fit your needs. But that also depends on actions after the bankruptcy discharge or completion of consumer proposal. Credit history since then is critical. This is the "start fresh", or "re-set" button that was the original belief. From this point forward there are a few things to keep in mind;

1) After discharge or completion, re-establish your credit with at least 2 credit accounts 
2) Use the new credit accounts regularly and keep them in good standing
3) To be in good standing you must pay at least the minimum payment every month, not go over your limit (try to keep it to no more than half!), and always pay before the due date (no late or missed payments on any account - even your cell phone!) 
4) Start saving! Having your own saved down payment can adds value towards a mortgage application

Keeping these important points in mind will help you become eligible for a mortgage from a credit viewpoint in the future. And remember, the reset button may be the option - but, what happens after the button is pressed is critical. Utilize the professional team (accountant, financial advisor, lawyer, bankruptcy trustee, etc.) around you to make the decision that's best for you and please get in touch anytime with your mortgage questions!

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