How Did This Problem Happen?
So you decided to do a consumer proposal. You wanted to do the right thing by not ignoring your responsibilities. Unfortunately, no one told you that a R7 would show up on your credit file. And now you are looking for a mortgage. Your circumstance are such that you need to get your own place.
How long does a proposal stay on my credit record?
Both Transunion and Equifax state that it will take 3 years for a consumer proposal to fall off your credit report after it has been completed. So if your proposal takes you 4 years to pay, then your score will be damaged for 7 years in total. The key is that it will stay on your credit bureau for 3 years from completion.
Perhaps you have been told to wait at least 7 years before applying for a home loan. Waiting 7 long years without any guarantee of being approved for a mortgage after consumer proposal can be disheartening. Fortunately for you, this advice may not apply to you.
Today, there is a growing realization of the need to offer home loan products that are specifically designed for borrowers with an imperfect credit history. Yes, mortgage programs have been created especially for borrowers who have gone through consumer proposal.
Yes, But Can I Qualify?
Now you are probably thinking that although you are eligible, it will be difficult to qualify. The fact is that qualifying is much easier than you think. Any liens, collections or judgments that appear on your credit report will also not be used in the evaluation of credit and will not need to be paid off before qualifying for the mortgage.
What is important and what will be looked at is your credit score, the value of the real estate and your ability to repay the loan. Now here is the good news: with a minimum score of 500, you are qualified to purchase a home with a 20% down payment. Having a credit score between 550 and 579 will allow you to borrow up to 95% of the purchase price.
With the competitive rates that are available on mortgage after consumer proposal, you are able to realize the dream of homeownership with a mortgage payment that is affordable and fits easily within your budget. Along with the traditional benefits of owning a home, such as equity building and possible income tax benefits, you will most importantly be rebuilding your credit profile. Additionally, you may also benefit from the current strong housing market and its appreciating home values. Can you say 407?
So now you know the following: that you can qualify for a home loan today, what the credit requirements for a mortgage are, and that you can rebuild your credit and financial life through homeownership. Gone forever are the days of waiting 7 years and living with the dim prospect of obtaining a mortgage after consumer proposal.
The ball is in your court. What will you do with this intel?
About the author:
Preston Williams is a licensed Mortgage Agent (Lic. M13000677). He offers mortgages through VERICO The Mortgage Leader Inc. (Lic 10238).
