If you are in debt over your head and realize that making your mortgage payments is not going to be possible, you can refinance your mortgage with a consumer proposal, through a program sponsored by the Canadian government. It is currently the only program that Canada’s government administers, and it was incorporated into the wording of the Bankruptcy & Insolvency Act as a way for people who cannot find a way to meet their debts to avoid bankruptcy. If you make a consumer proposal, you have a time period of protection from the creditors while you strike a deal to pay back some of your debts. Ultimately, you only repay the amount that you can afford. Your creditors end up with more than a bankruptcy settlement would give them, so it’s ultimately a win-win for you both.
For you to qualify for the consumer proposal mortgage program, you have to file your written Consumer Proposal through a Consumer Proposal Administrator who has received licensing from the government. This person would also be licensed as a bankruptcy trustee, because the government actually runs both programs as a part of the Bankruptcy and Insolvency Act. If you do not use a trustee, that person cannot file a Consumer Proposal for you.
So how can you refinance a mortgage during Consumer Proposal? There are ways, but you have to have all of your ducks in a row. If your current mortgage has been paid on time and is up to date, you shouldn’t have any problems renewing a mortgage that has come to the end of its term, and it is also possible, in some situations, to refinance an existing mortgage. If you begin a Consumer Proposal and then try to get a new home loan, that process is considerably more difficult.
Consumer proposal and mortgage renewal
One thing that may help you gain approval for a refinancing when doing a mortgage renewal with consumer proposal is bringing in a co-signer. This would allow someone with much better credit to be part of the application process. It is also good to create a budget report to show the refinancing lender. This shows that you can make monthly payments within the income that you have. If you represent a higher risk, of course, you can expect to pay a higher rate of interest. You’ll also want to get a letter from the Consumer Proposal Administrator overseeing your case attesting that you have made all of the payments under your pending Consumer Proposal on time. It can take as long as five years for a Proposal to be completed, so there are many people that go through renewal and/or refinancing during their Proposal period.
If you are considering filing a Consumer Proposal or have already filed one, and your mortgage is one of the reasons why you need to start trimming debt, talk to one of our experts at Amansad Financial who can help you Refinance Mortgage With Consumer Proposal. We will take a look at your specific situation and make a recommendation as to your best course of action. Many people fall behind on their debts, so don’t let that stop you from making sound financial decisions that will affect your future.
Refinance Mortgage Loan With Bad Credit
Most of the time, you probably hear about refinancing your mortgage loan even with bad credit as a way to reduce the interest rate that you’re paying. Because of the Canadian way of handling mortgages, you can rarely sign a loan that’s longer than ten years in term, and frequently people sign mortgages that are significantly shorter in term because getting a ten-year note means paying significantly more in interest rates. However, there are some situations in which refinancing in the middle of the loan to get a better rate makes sense.
Bad Credit Mortgage Refinance Loan
There is another situation in which Refinancing a Mortgage Loan with Bad Credit becomes necessary, and that comes when foreclosure appears to be imminent. Perhaps you’ve recently gone through a layoff, or your spouse has had an illness and has not been able to work. Maybe you’re going through a divorce and are really struggling to make the payments on your own, but you haven’t found a buyer at the right price. You’re about to get a raise at work, but you need something to keep the bank from foreclosing in the meantime.
In this case, refinancing with bad credit can save your house — and keep your credit rating from tumbling further. In this case, another lender pays your existing mortgage, and you transfer the obligation to this new lender.
How would this work? Amansad Financial has connections with a network of private lenders throughout Canada. These companies and individuals specialize in funding mortgages that represent a higher degree of risk than people with stellar credit scores. They recognize that there are some cases in which the borrower still represents a fairly low degree of risk — after all, people will usually default on everything else before their mortgage — and they want to profit from the real estate market at a rate higher than what the banks get.
So if you’re finding yourself caught in the early steps of foreclosure, you can eliminate much of the stress of your situation by securing a second loan that pays off your mortgage. In many cases, these private lenders only ask you to pay the interest portion of the loan during the term, which varies between a few months and as long as two years. This gives you time to get your financial affairs back in order so that you can go back to paying interest and principal. At the end of the loan, you can either renew the loan with the private lender (if the lender is open to it), find another private loan or go back to the bank, if your credit is back up where it needs to be to gain approval.
You may be wondering how the approval process works with a private lender. After all, if your credit were in the right place, your own bank might refinance your mortgage loan to get you out of this situation. However, you may have already explored refinancing with your own bank and other lenders, only to get turned down because of your credit score.
Bad Credit Mortgage Refinance Lenders
With bad credit mortgage refinance lenders, the property is the element that the lender uses to approve or deny the loan, as well as the amount of equity that you already have in it. In most of the major cities in western Canada, private lenders will provide up to 75 percent of the value of the house in a loan. Here’s how this works. If you bought a house for $400,000 and still owe $250,000 on it, you have a significant amount of equity. Even if the value of the home has sagged a bit in the market to $360,000, you’re still asking for a loan ($250,000) that is just under 70 percent of the value, so most private lenders will work with you. For people living in urban areas, some private lenders will fund 85 or 90 percent LTV loans, depending on which part of town the property is in.
If you live further out, you’re going to need to have more equity. The top LTV that many private lenders will provide in rural communities is 60 or 65 percent, although some will go as high as 75 percent on a case by case basis. If you’re just buying land, you need to have at least 50 percent of the value in equity for a private lender to help you. The more documentation you have in hand, the likelier lenders are to push the boundaries a bit to work with you. After all, they want to make money too.
If you are in the sort of trouble that leads to foreclosure, give one of our private lending specialists at Amansad Financial a call. We will go over your situation and recommend the best way out for you.
Mortgage Refinancing After Bankruptcy
If you know anything at all about maintaining personal credit, you know that bankruptcy is akin to a nuclear bomb going off inside your FICO profile. Your score will plummet, and the bankruptcy will stay on your credit report for seven years. However, just because you go into bankruptcy doesn’t mean that you will never have access to credit again. Mortgage refinancing after bankruptcy is possible, but when you go in to talk to the lender, here are some questions you need to be prepared to answer.
Getting Mortgage Loan After Bankruptcy
Refinancing A Home After Bankruptcy
1. Have you been discharged?
In the world of bankruptcy, the term “discharge” means that your bankruptcy has been finished. The reason why lenders want to know this is that if you still have an open bankruptcy, you can still add new accounts to this, including any lenders to whom you make application. Not a lot of lenders are going to approve credit for you when you can still lump them in with your bankruptcy.
There is a big difference, though, between discharge and dismissal. If your bankruptcy gets dismissed, this is terrible news. You get the harmful effect of your score that comes with filing a bankruptcy, but you don’t get any of the advantages, because you never completed the bankruptcy. This is like paying a collection account off and then seeing that the account is still on your credit report, so your score remains the same or even drops a bit, because this newly paid account has more recent activity on it. Even with dismissal, there is hope, but the road is tougher.
2. When did your bankruptcy become discharged?
The longer it has been since your bankruptcy was discharged, the more luck you will have getting credit approvals. Every lender has guidelines for credit that are different. In the first two years after your discharge, you are still looked at as a subprime applicant. After that, you can apply for programs that are more conventional in nature. So once two years have gone by, you’ll see a lot more options come your way.
3. What is your credit history like since you went through discharge?
If you have records of late payments on the credit report after you have had a bankruptcy discharged, that really hammers your score. This is the time period that lenders will look at the most closely, so pay early or on time. Things like collection accounts since your discharge will hurt even more. If you can tell a lender that you’ve reformed your ways and paid everything on time since your discharge and can show them a clean credit report for that time period, your chances are approval are much greater.
4. What forms of new credit have you acquired since discharge?
Just staying away from credit is not going to help you. If you can set up new credit accounts after a discharge, this will impress lenders. Shoot for things like a loan from your credit union or bank, a home equity loan, a student loan, overdraft protection, or a loan or lease for a car. Here’s the deal — most lenders do not want to be the first one to approve you after discharge. However, once you get one approval, the others will come later.
5. What do you have in equity?
If you’re looking to refinance a home loan after bankruptcy, the lender will look at the equity that you have, to determine whether the value of the house supports the amount of the loan you are taking out. In some instances, particularly if you are dealing with a private lender, you may have to add a bit of cash as a sweetener.
6. What are your credit scores now?
Get Mortgage After Bankruptcy
Just about every traditional refinancing lender in Canada looks at FICO scores, which means that you need to be looking at them too. For a relatively low fee, you can monitor your credit scores as often as every day if you want. Knowing where they are allows you to follow up if something hits your credit profile that shouldn’t. Creditors make mistakes all the time, and the sooner you jump on mistakes on your report and file a dispute, the more likely you are to impress a lender.
Mortgage Loans After Bankruptcy
Bankruptcy does not have to mean that you spend the rest of your life renting a small apartment. You can still call on Mortgage Lenders After Bankruptcy. While there are some more hurdles that you will have to clear to get refinancing approval, you can still pursue your financial dreams, as long as you establish discipline and settle your accounts on time. If you are considering filing a Consumer Proposal or have already filed one, and your mortgage is one of the reasons why you need to start trimming debt, talk to one of our refinancing experts at Amansad Financial. We will take a look at your specific situation and make a recommendation as to your best course of action. Many people fall behind on their debts, so don’t let that stop you from making sound financial decisions that will affect your future.