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How To Get a Mortgage After Foreclosure in Canada

Few situations are as stressful as being forced out of your home as a result of being unable to continue your usual house payments. If you now have your finances back in order and wish to purchase another house, you may wonder how difficult it is to qualify for a second mortgage.

The good news is that a foreclosure will not put a permanent black mark on your credit. Depending on which lender you choose, you can obtain another mortgage loan after a varying period of time.

Foreclosure periods

So how long does a foreclosure waiting period last for Canadians? The answer depends on several factors.

After preliminary laws, each lender possesses its own specific set of rules and limits. Waiting periods of traditional lenders range from two to 10 years, whereas private lenders may provide a loan on shorter notice.

While the private lenders may offer a shorter or even nonexistent waiting period, it is prudent to note that they typically charge much higher interest rates than traditional lenders. Depending on your financial solution, you may have to choose between a longer wait or higher mortgage payments.

Factors surrounding your home’s foreclosure

The hows and whys behind your home foreclosure may also factor into a lender’s decision to give or deny you a loan. For instance, if frivolous spending was what prevented you from being able to pay your mortgage, lenders will be unimpressed, and you will have to wait for the traditional foreclosure period to be over. If extenuating circumstances forced you out of your home, such as a sudden job loss, the death of the primary income earner, or medical issues, lenders may be more understanding. If you have documents that prove you lost ownership of your home due to reasons outside of your control, you may be able to qualify for a loan after a shorter or nonexistent waiting period following foreclosure.

Improve your credit as soon as possible

Whichever options you decide to take on your road to a new mortgage, the first step that you should prioritize after foreclosure is to improve your credit score as soon as possible.

Regardless of your yearly salary, lenders often refuse to give you a loan if you have poor credit. If you consistently pay all of your expenses on time and keep all of your finance-related documents on hand (such as pay stubs and tax forms), the loan process will be more likely to succeed.
If you have any questions or doubts on how to qualify for another mortgage after foreclosure, it is wise to discuss your options with an experienced financial advisor.