Can you get a Mortgage when you have Debt?
Owning a home is the number one financial goal for many Canadians and many Canadians have a large amount of debt.
Is it possible to get a house mortgage if I have a lot of debt?
The answer depends on how high your gross debt service ratio is. In the process of reviewing your mortgage application, bank or mortgage lender will determine your gross debt service ratio or your ability to make monthly payments on your debts and decide if you are eligible for the mortgage.
If you want to buy a house but your debts are too high, you must first get out of debt, and then save for a down payment. You will need to improve your gross debt service ratio.
How can I achieve that?
First, try to pay off your debts on your own: cut your expenses to free up cash and then use that money to repay your debt. If this is a challenge because your debts are too high, you might consider making a consumer proposal to your creditors as a way of dealing with your debts. By negotiating with your creditors, you can get some of your debts discharged and begin saving for your new home.
If consumer proposal is not an option in your situation, filing personal bankruptcy may be necessary. Filing a consumer proposal or bankruptcy will put a note on your credit report that you were not able to pay your debts in full, which will make it harder to qualify for a mortgage; however, you will have no debts anymore, which means that you can start saving for a down payment and look forward to qualifying for a mortgage in the future.
Getting a Mortgage
You can qualify for an insured mortgage 2 years plus one day after being discharged from bankruptcy if you have a down payment saved and at least one year of re-established credit.
You will most likely need to take some action to improve your gross debt service ratio and to make it happen for you, the Licensed Insolvency Trustee at D Thode and Associate can help you with that and find the alternative that fits your situation.
Please call for a free consultation today. 866-712-5353