What Are My Chances of Getting a Mortgage after Bankruptcy?
Many people are able to keep their homes when they file an Assignment in bankruptcy. When you file an Assignment in bankruptcy it is the job of the trustee to maximize the realization for your unsecured creditors. This includes your home, if there is any equity in the property. Equity is the difference between what the house is worth and what is owing on the house, such as a mortgage, property tax etc. If the value of the house is approximately equal to what is owing on the house, the trustee may allow you to keep the house and continue making the payments. Therefore allowing you to keep your mortgage after bankruptcy.
If there is some equity in your property, the trustee still may allow you to keep your home on the condition that you contribute the amount equal to what the equity is worth into your bankruptcy estate (perhaps by making monthly payments, borrowing from a friend or getting a second mortgage (this can be difficult if you are bankrupt, you may want to investigate bankruptcy mortgage lenders).
What happens when it is time to renew your mortgage?
Now that you have continued to pay on your mortgage, what happens when it is time to renew? Will you have to change banks? Can I get a mortgage loan after bankruptcy? Most banks would prefer to have you sign the mortgage renewal and continue paying off both the principal amount and the interest, for say the next 25 years, than to foreclose on it now, and risk losing all the future profits plus an additional amount of money by selling your house at a discounted foreclosure price. Be sure to confirm with your lender, but in most cases, you should be able to make a mortgage renewal after bankruptcy provided that the mortgage payments are up to date.
Buying a house after bankruptcy
Can I buy a house after bankruptcy? – It is a common question trustees are asked. Most people are not able to afford to purchase a home outright and need to know how to get a mortgage after bankruptcy. The key is to ensure that you receive a discharge from the bankruptcy and that you are working on re-establishing your credit. Canada Mortgage and Housing Corp. will review your application as early as 18 months – 2 years after discharge if you have re-established your credit. Therefore, it is possible to get a mortgage post-bankruptcy.
You can also talk to a Licensed Trustee to get your questions answered. We have trustees everywhere from Ottawa to Edmonton and more. Talk to one today.