Solving Insolvency Issues – Mortgage Brokers to the Rescue

There are many options when managing insolvency, but the two that are most extreme are declaring bankruptcy and submitting a consumer proposal. Both eliminate all debt at a lower cost than the debt is worth, but will affect your credit rating for years.

If you are planning a major debt management move, it’s best to research your options thoroughly. On the other hand, when it comes to homeownership, there are a couple of crucial differences between bankruptcy and consumer proposals:

Bankruptcy

  • Assets like your house and car are often seized to pay the debt (which assets depend on the laws in your province).
  • Bankruptcy stays on your record for six years after completing payments, which usually takes nine to 21 months.

Consumer Proposal

  • Allows you to keep assets like your house and car, though the worth of the assets is often added to your debt repayment plan.
  • A consumer proposal stays on your record for three years after completing payments, which usually takes 48 to 60 months, though you do have the option to pay it off sooner.

How a mortgage broker can help

Very few lenders will be willing to take a risk on loaning money to someone with a record of solvency issues. You can spend countless hours shopping around local banks and credit unions yourself, or you can work with the experts—mortgage brokers.

Mortgage brokers know lenders. Not only do they know a lot of lenders, they know how lenders think and what they look for when deciding on a loan. Mortgage brokers also know how to advise you on rebuilding your credit, how to structure your assets to look best for a lender, and which lenders are likely to take a chance on your debt.

Paying Off Your Debt

If you want to pay your consumer proposal off quickly, you may have the option of using the equity in your home to refinance while you are under the consumer proposal. It won’t be easy as most lenders will not loan to someone under a consumer proposal, but it is worth looking into your options. The sooner you pay off your debt, the sooner your credit record will be clean.

Buying a New House

After a bankruptcy or consumer protection is paid off, you have more options for a loan depending on the amount of time that has elapsed since your financial difficulties, down-payment rate, proven ability to make payments, and the equity in any home you currently own. A mortgage broker will be able to help you prepare your assets and find the best mortgage offer for your situation.

Improving Your Credit

Mortgage brokers can also act as advisors, reviewing your financial status and coaching you on how best to improve your credit. Their assistance will help you reach milestones that will steadily increase your borrowing options and rebuild your credit rating.

We specialize in difficult or unique mortgage situations. Don’t hesitate to contact us for help with yours!

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