Buying A House After A Bankruptcy

Tuesday, August 18, 2015 - 19:44

Consumer Proposals, Bankruptcy, Rebuilding Credit


If you’ve declared bankruptcy in the past, know that you’re not alone. Further, know that your situation is nothing to be ashamed of. No one wants to declare bankruptcy; sometimes, it may be the only solution to a difficult situation.

I see many people who are concerned that filing bankruptcy or making a consumer proposal will effect their credit rating and in turn, their ability to buy a house in the future. Although your credit rating is a key factor that mortgage lenders consider, it is ultimately just one piece of puzzle. Mortgage lenders also consider the size of the down payment and income consistency. For instance, someone with a good, dependable source of income may be approved for a mortgage even though they have a lower credit rating and a lower down payment than someone who doesn’t have a dependable income source (self-employed or working on commission).

When people ask me questions about buying a house, I always recommend that they focus their energy on saving for down payment to off-set their lower credit rating. Obviously, they should take steps to rebuild credit rating, but in most cases it will take longer to save up enough for a down payment than it will to rebuild their credit rating.  

I’ve seen many people buy a house two years after being discharged from bankruptcy. Those people made sure they immediately took steps to rebuild their credit rating and began saving money for a down payment as soon as they were able. 

If you have any questions about bankruptcy or consumer proposals, please feel free to contact our offices in SW Ontario. We are here to help.