Insolvency and Mortgage
Some time ago, an unfortunate situation forced you to make a session of your property, or if you prefer, you went bankrupt. Today, your financial situation has improved significantly, you want to buy a property, but what will the reaction of mortgage lenders face this bankruptcy?
The majority of regular financial institutions will
additional conditions to those usually required. There are some
who will refuse to consider your request.
What are these conditions?
• The financial institution you are addressing does not need to
to have lost money in this bankruptcy;
• You must have been released from bankruptcy for two years;
• Your credit must have been reinstated using credit products
for at least one year and sometimes two years;
• A down payment equivalent to 5% or 10% of the purchase price
will be required, according to the lender;
• Some institutions will only consider your request
if your bankruptcy was for a reason deemed acceptable and a
In case of financial difficulties
Your income no longer allows you to meet your obligations, but you refuse to go bankrupt? An advisor can suggest you proceed by consumer proposal. This proposal is in fact a mechanism that allows you to reach agreement with your creditors to extend the partial or full payment of your debts. This procedure allows you to avoid facing justice and a judgment against you for non-compliance with your obligations. Other similar mechanisms, such as the proposal for debtors (for business owners) and voluntary deposit (for individuals) can also be used. All these possibilities have the same goal: to avoid the seizure of your property by your creditors.
What will be the position of mortgage lenders if you have used one of these mechanisms?
Although you have made arrangements to pay off all or part of your debts, the lenders will consider you as an ex-bankrupt. You will have to meet the same conditions as those required for these, mentioned on the previous page. Fortunately, mortgage brokers should still be able to help you with your project. Indeed, they can find temporary solutions by directing your file to alternative lenders. The rates offered by these are higher than the current rates, but the standard is that these loans are short-term. This period will allow you to restore your credit and, at the end of the term, your broker may direct your file to a conventional financial institution.