If you have declared personal bankruptcy, financial establishments may still consider your application for a mortgage loan. However, your bank may require that you rebuild your credit first and then approve your application. Mortgage brokers will also make sure that you meet the requirements before approving your application.
The first step in this direction is to save some money. This is necessary because you need to have enough money for the down payment. You can put this money in a savings account with a high interest rate. The amount you need to save is determined by the purchase price of the property you seek to buy. You should be realistic and set the right goals. You may want to start with a small flat or house, working your way up. If you seek to buy a house priced at $150,000, and you manage to save about $100 a week, you will save enough in about two years.
The second step is to rebuild credit, and you can do this by obtaining a secured credit card. The credit limit of your credit card will be equal to the deposit you make. While you are using a secured card, it will still appear on your credit report just like the standard credit cards. You should do your best to make timely payments on your car loans, credit cards, or student loans. Late payments will affect your credit score.
A friend or relative can cosign for you if you do not meet the loan requirements in Toronto, but make sure you can repay the loan. Otherwise, this is likely to put a strain on your relationship with them.
A good time to apply for a mortgage is when your loan or credit card has been reported to the credit bureaus. Then you can expect to be offered a decent interest rate on your mortgage loan. It will take you about two years to get there, but this is also how long you need to save for a down payment. You can apply for a loan earlier than this, but the interest rate will be higher, costing you more in charges in the long run.
There are two main players to check with if you want to apply for a mortgage loan. These are mortgage arrangers or brokers and mortgage providers or lenders. If you are an existing client, it is recommended to apply directly with your financial institution. Brokers specialize in finding mortgage loans for their clients and have working relationships with many lenders. They will help you choose the right mortgage for your financial situation, assist with your mortgage application, and offer advice. Keep in mind that your mortgage broker has to work harder because you are considered high risk by most lenders. Hence, you may be charged a higher fee.