Debt Counselling and Credit Rebuilding

As mortgage professionals, in my opinion is it our duty to make sure that the mortgage we help our client to choose is in their best interest.  Unfortunately, sometimes before we can qualify our clients for a mortgage, we must deal head-on with outstanding issues, such as previous or ongoing bankrupties and/or consumer proposals.  Other issues might also be job loss, separation, divorce and or inability to manage debt, just to name a few.  All of these can have a devastating impact on your ability to qualify for a mortgage, because they ultimately affect your beacon score or credit bureau.

Please read here an article I wrote about going from almost financial ruin to mortgage. 

Moving from financial ruin to mortgage can be done, however you must have a mortgage professional willing to spend the necessary time in guiding you along the path from bankruptcy and/or consumer proposal to a mortgage.  That includes debt counselling and credit rebuilding


Here Are The Necessary Steps To Take:

  1. Reach out to me – I can provide you with a no-obligation half-hour session on the phone to assess your situation;
  2. Once we assess your individual situation, we will make a plan to rebuild your credit; this will first begin by building you a budget you can live with and abide to; it will also include the application for a secured credit card, which can start from $500 up to $2,500, depending on your financial means. The benefit of a secured credit card is that unlike a prepaid credit card, it tracks your spending and you are limited to the amount you order.  So if you have a secured credit card for $500, you can only spend that much.  The key in rebuilding your credit, is to only spend what you can afford to spend each month and repay it before the interest is due.
  3. Once we start seeing activity on your credit bureau, we move to other means of building credit, such as unsecured loans and vehicle loans, to name a few;
  4. Once we have a good credit rating, reestablished credit and you can meet your monthly loan obligations, we can proceed to applying for a mortgage.

Depending on how hard you work you can rebuild credit in most cases in less than two years!

Case Study – Mortgage

When I met this client, he was recently discharged from a consumer proposal and had done two mandatory sessions with the trustee. I was introduced to the client with a plan to help him rebuild his credit. Unfortunately during the term of the consumer proposal, he was too afraid to seek further credit and/or the right credit to rebuild his credit and let it lapse until his proposal was discharged. I sat down with the client and looked at everything – his income, new debts that were incurred after the consumer proposal was filed and outlined the steps he would need to take to qualify for a mortgage. I established a step-by-step plan and met with him quarterly to make sure he was on track. After 26 months, I was able to get him qualified for a mortgage and I am happy to say that 15 months in, he is sticking to the plan I laid out and living in a home he plans to spend at least the next 5-10 years in as he has now married and has a young child on the way!

He was paying $1600/mth in rent+ utilities

The Numbers

MORTGAGEConsumer Proposal - $55,000 – paid over 5 years
New debts incurred - $15,000
Eliminated his debt in 26 months and helped him qualify with 5% down on a house purchase of $265,000 starter home in Barrie, Ontario.
Purchase Price - $265,000
Downpayment - $13,250
CMHC default insurance $5,035

Monthly mortgage of $1,462.93
* not including property taxes and utilities.