Second Mortgage

Can you get a mortgage after a bankruptcy?

Yes, even if you have declared personal bankruptcy, you may still qualify for a mortgage in Canada. Generally, if you apply for a mortgage after bankruptcy, lenders will require you to start re-establishing your credit before they will grant you a mortgage.

In addition, before approving a mortgage to persons with bad credit, mortgage brokers will make sure that they qualify for the mortgage.

Here’s how you can qualify for a mortgage after bankruptcy:
First, once you are discharged, start saving money. You will need a down payment to buy your house.

Second, re-establish your bad credit – mortgages are much easier to obtain with a good credit history. The easiest way to do this is with a secured visa card. You deposit $1,000 with the credit card company, and they give you a credit card with a $1,000 limit. The credit card shows up on your credit report as a normal credit card; you have started to re-establish your credit.

Third, you should consider using some of your savings to invest in an RRSP. If you are a first time home buyer in Canada, you can borrow up to $20,000 from your RRSP to use as a down payment on your new home.

Since contributions to an RRSP generate a larger tax refund, you can use your tax refund to grow your nest egg even faster. It’s a great way to build up a down payment, because you are using some of the government’s money to do it!

Fourth, be realistic in your goals. Start with a small house, and work your way up from there.

Finally, to find out if you qualify for a mortgage after bankruptcy, contact a mortgage broker. He/she can also tell you how large a mortgage you can obtain. Good luck with your new house!