April 12, 2023

Getting a Mortgage Post Bankruptcy

man with pockets turned inside out, holding loose change, close up

Maybe it’s because we all played Monopoly as kids, but people tend to think that declaring personal bankruptcy is the end of the game. After all, in a world driven by markets and money, possessing wealth feels reassuring. Being without it can be the exact opposite.

Thankfully, real life is not a board game, and people can absolutely rebuild their credit score after declaring bankruptcy! Let’s look at a few ways we help stabilize people’s finances so they can get back to steady financial ground.

First Steps

Anyone who has declared bankruptcy should immediately take steps to improve their credit score. While everybody has unique financial circumstances and lifestyles, there are a few overarching approaches you may want to take.

You’ll need to stay on top of monthly payments and ensure none of them slip through the cracks. Pay your monthly credit bills on time, and try to pay them off fully if you can.

You may want to consider reducing spending where possible. If you’re careful, rebuilding your credit score doesn’t have to be super long or challenging.

You may be surprised to learn that closing a credit card account doesn’t necessarily improve your credit score since the history of the account lasts for six years after the account was found delinquent. Getting your credit healthy again is a necessary first step.

There are multiple forks you can take at first. It usually takes two years from the time your bankruptcy was discharged to get a mortgage, though lenders are free to do as they please. They could decide to lend to you in less time or skip you altogether.

How to Rebuild Credit

When it’s time to reapply for a mortgage, nothing will be more impactful than your credit score. However, there are a few things that are also crucial:

  • Income
  • Your home’s loan-to-value ratio
  • The home’s value and condition
  • Any other assets you may own

Naturally, the more your assets are worth, the better this reflects on your credit score. For example, if your home doesn’t need repairs, it’s in a desirable location, and you’ve got the majority of it paid off, you’re in a good place.

Owning property is an amazing asset that can help restore your credit, though if the home is falling apart and poorly located, you have a very different asset on your hands.

Burke Financial offers mortgage refinancing solutions that let homeowners take advantage of the equity they’ve built over the years by making their monthly mortgage payments. We can replace your existing loan with a revised one using the same lender or a different one, as you please.

a professional breaks down a document for a client, seen from shoulders down

Refinancing your mortgage can help reduce monthly interest payments, saving you hundreds or thousands of dollars that add up quickly. Burke Financial has already worked with thousands of people in Ontario across all levels of income, credit, and debt.

We know how debilitating it can feel to be underwater financially, and we’re proud to have helped thousands of people in Ontario improve their credit scores. Speak to an award-winning mortgage broker from Burke Financial today to get back on stable ground.

Our brokers will listen carefully to your financial goals and lifestyle needs, then let you make informed decisions that best suit your situation. We understand that while there are only so many financial paths forward to take, every client has unique requirements.

Higher Interest Payments

Most people are able to get a mortgage after declaring bankruptcy, but because lending to them is riskier, the interest payments will likely be higher. Some private lenders may give you a mortgage in less than the two years conventional lenders require, but they usually attach many strings and come with higher interest payments.

You may also face larger down payments. If you wait two years and plot your money moves carefully, you can avoid such steep fees. Speak to a broker at Burke Financial about the right way forward for you. We’ll help you steer clear of higher fees so you save money each month and have a simpler time tracking payments.

Stopping Power of Sales

How do homeowners facing bankruptcy address their financial issues? There are a few considerable risks, like power of sale. If a homeowner fails to make the agreed-upon payments, the lender can activate a power of sale process to recoup the money they initially loaned.

Basically, the lender can legally evict you from your home and take full possession of it. Fighting back against a power of sale is complicated without a team of experienced experts supporting you at every step.

Burke Financial can help people facing bankruptcy stave it off, just like we help people who have declared bankruptcy get back on their feet. We have many tried and true methods that have already helped thousands of people across South Ontario.

You can talk to a mortgage broker at Burke Financial today to get support fighting the power of sale. Even better, chat with us earlier about ways to leverage your home’s equity, like a HELOC, home equity loan, second mortgage, and others.

That way, you won’t come so close to bankruptcy in the first place. Like everybody, homeowners need to contend with inflation and rising interest rates. Unlike everybody else, homeowners have an asset to leverage which can really make a difference.

Financial stress is one of the worst types of stress a person can have, especially when interest payments keep growing and seem like they’ll never stop. As they grow in size and number, it’s easy to feel despondent, like there’s no solution. But don’t despair!

Burke Financial works with all homeowners, even if they’ve been denied a loan by the bank. Declaring bankruptcy can actually be the wisest course to take in some scenarios. If you are currently bankrupt or think you might have to declare bankruptcy soon, don’t feel like there’s no hope! Contact Burke Financial today to get the support you need from experienced professionals accredited by the Better Business Bureau.


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