Depending upon the circumstances of your bankruptcy, some lenders would consider providing mortgage financing. If you have been discharged from bankruptcy and have re-established some credit, chances are you and your property are mortgage able. The best way to determine whether or not you qualify is to discuss your particular situation with us.
A Pre-approval is the first step that you should take if you are in the market for a property. Based upon the information that you give to a Mortgage Logic broker he/she will submit an application to a lender that best suits your needs and have them respond with a pre-approval that will guarantee an interest rate and mortgage amount for a certain period of time. A pre-approval essentially approves all aspects of you as the borrower with a financial institution. Once property aspects are known then this will be added to the pre-approval in order to obtain an approval.
Both pre-approvals and approvals done properly require that you provide verification of information provided. This would be verification of income, employment and property representations. Good effective realtors will require that you have a pre-approval before they start showing you property.
If you receive Support and/or Alimony, the amounts are generally included in your total income to determine the mortgage that you qualify for. You will need to show that the amount of this payment has been regularly received. Showing your last three months receipts will usually suffice. This may vary from lender to lender. A copy of your separation agreement or divorce decree is usually requested. If none exists then you will typically be asked to sign a declaration that says you have no outstanding liabilities remaining from your separation.
If you pay Child Support and/or Alimony, the amount paid out is deducted from your total income before determining the mortgage that you qualify for.
What is your Total Income (line 150 on your tax return or notice of assessment), the amount of any outstanding debt and corresponding monthly payments?
GDSR: For a principal residence, up to 32% of your Total Income can be used toward mortgage payments, property taxes and heating costs (if applicable, one half of the monthly condominium common/maintenance fees are also included into this calculation).
TDSR: 40% of your Total Income minus all of your debt payments or obligations (other than current mortgage payments, property taxes and heating costs), including car loans, credit cards, lines of credit, etc.
The lesser of the first or second calculation will tell you how much of a housing related payment you can afford, including your mortgage payment.
These calculations are fairly standard amongst Lenders, although different lenders will have different rules as to what they may include or remove from these calculations. There are various non-conventional lenders in the market that will qualify clients at higher ratios that these. These types of mortgages will typically have higher rates of interest applicable.
Don't become house poor! Be sure that you are comfortable with how much you commit to paying a mortgage, property taxes and heating costs. If these costs equal 32% of your income, you will qualify as long as TDSR does not breach 40%.
For a detailed calculation Contact Us at Mortgage Logic.
Mortgage Loan Insurance is required by law for certain lenders to insure them against default on mortgages with a loan to value ratio greater than 80%. The insurance is provided by Canada Mortgage and Housing Corporation (CMHC, a crown corporation), and Genworth Insurance Company, (an approved public corporation), Canada Guaranty (an approved public corporation) and other entrants into the Canadian market. The premiums for this insurance, (ranging from .50% to 7.3% of the mortgage amount), are paid by the borrower and can be added directly onto the mortgage amount, and amortized over the life of the mortgage. Mortgage loan insurance is not the same as Mortgage Life Insurance. Find out more at the Canada Mortgage and Housing Corporation website.