Mortgage 1 year after CP discharge

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dfire80

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Mortgage 1 year after CP discharge
« on: October 29, 2012, 09:39:56 PM »
Hi everyone and thanks for taking the time to read and help me with my situation. In October 2010 I had to file a cosumer proposal which I paid off in July 2012. My wife and I would like to purchase our first house next July (1 year post discharge). My wife makes approx $55,000 / year, good credit and only debt is a car payment. I also have a stable job $90,000 / year and just financed a car through Scotia Dealer Advantage (at a less than attractive interest rate) but it will hopefully build my credit. In july of next year we will also have approx $65,000 to put down on the house. We have contacted a mortgage broker and she told us that we would need to be placed with a private lender at a 6% interest rate and would accept a 10% down payment. Has anyone else gone through trying to get a mortgage before the 3 years of re-established credit with any luck? I was thinking of moving all our accounts to a local credit union now in hopes of building a relationship with them from now so that next July they would be interested in the mortgage. I'm just not sure if that is even possible with all these mortgage rules now. Any help would be greatly appreciated!!!!

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tipler

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Re: Mortgage 1 year after CP discharge
« Reply #1 on: October 30, 2012, 02:06:35 AM »
Hi dfire80,

First of all your mark on credit history will disappear 3 years after your last payment to CP.
Housing is predicted to be soft for years to come and interest rates will only rise in a future.
I have no experience in mortgage after CP as I 'm currently in CP, however paying 2X the posted bank rates is a :
" highway robbery" ( least to say). Please take a look at any mortgage calculator provided by any Canadian bank and compare the interest at 3.75 vs 6 % and the monthly payment amounts; it's huge( roughly $400/moth) difference.
In my opinion I would save the down payment and once your credit is build up and mark from CP is gone than I would re asses the housing situation and you will have a lot more bargaining power.



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dfire80

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Re: Mortgage 1 year after CP discharge
« Reply #2 on: October 30, 2012, 07:21:05 AM »
Thanks for the opinion... Here's the way I'm looking at it. The housing market was supposed to cool years ago which didn't happen and there are always talk of interest rate increases. Both of these are extremely hard to predict so I will just count on past precedence and figure that interest rates will stay low for the near future and a detached house in the gta will still average an increase of 3-5% / year. Therefore the $450,000 house today (or in my case 10 months from now) will be $475 - $500 two years after that. Yes I agree that 6% is a high interest rate but the mortgage is open with no prepayment penalty. At least in 1-2 years I could refinance at a more competitive interest rate. The $400 / month difference in interest rate is huge, I agree... but that does not make up for the appreciation of the property, never mind calculating rent into the equation. My question is more regarding credit unions... has anyone had any luck before the 3 years after discharge with a credit union? Affordability of the property and my wife's credit are non-issues but the only thing in the way is the CP 1 year discharged. I understand that CMHC will not insure a property with a down payment under 20% in my situation but I'm unsure if a credit union requires mortgage insurance like the big banks or if they charge their own insurance? Any insight would be greatly appreciated!

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TreeFrog

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Re: Mortgage 1 year after CP discharge
« Reply #3 on: October 30, 2012, 11:23:48 AM »
Hi dfire,

Yes, I have had luck with my local credit union.

Last year I had to get a brand new mortgage, right in the middle of my CP, because my mortgage co. was an American company (GMAC) affected by the US meltdown. They withdrew entirely from business in Canada and needed all their mortgages paid out at the end of their terms.

Needless to say, I was horrified! But my trustee said not to worry - go to a local credit union or to CIBC. I approached my local credit union, right out of the blue (didn't have an account) - and based on my current credit rating, which was fair (I have a couple of secured credit cards that I keep current) and the fact that my CP was in good standing, they were happy to offer me a mortgage at the "posted rate", which was then 5.25%. Had I not been in the proposal situation, I would have gotten their "preferred" rate of about 3.75%, so I did take an interest hit but not a huge one.

Yes, credit unions have the same rules about mortgage insurance that banks do. To avoid the CMHC/Genworth credit rules, you will need 20% down.

As Tipler has said, don't take a bum deal! What the broker told you about needing a private lender is just plain ridiculous! Long story short: you can finance now at a moderate interest penalty, or wait until you are clear of your CP (3 years) to start out at a more competitive rate.

Best wishes,
~Wendy

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dfire80

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Re: Mortgage 1 year after CP discharge
« Reply #4 on: October 30, 2012, 03:33:55 PM »
Thanks for your information... I'm assuming that when you received your mortgage through the credit union you had 20% equity in your house already, which dropped you out of the need for insurance. I wasn't sure if credit unions also had to follow the same insurance guidlines that the banks do. Other than private mortgages, are any other lenders not mandated by Genworth or CMHC? The private lender that my broker found adds their own insurance on top of the interest rate.

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TreeFrog

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Re: Mortgage 1 year after CP discharge
« Reply #5 on: October 30, 2012, 09:04:18 PM »
Yes, I had just enough equity that I was able to cover the 20%. As far as I know, all major institutions including credit unions have to insure through Genworth or CMHC. For a time there was TD Financial Group, which was self-insuring and had different rules, but they've disappeared - perhaps part of the new mortgage rules. I think they were charging about 7%, so it's pretty hard to get around some extra costs while your credit rating recovers from a CP. But I think right now you ought to be able to get 5.5% or better ... ask around! Perhaps try another broker, since they can query many institutions with only one query to your credit bureau. Or perhaps go straight to a credit union.

Best wishes,
~Wendy

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Mortgagebrkr

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Re: Mortgage 1 year after CP discharge
« Reply #6 on: November 11, 2012, 09:33:29 PM »
Hello Dfire80,

The private lender's interest rate of 6% is actually good knowing that they are a private lender.  Send me a quick email of what you want to do and let me send it to one of our institutional lenders and see what they can do.  I cannot promise you bank's best rate as your condition is different.

Email me soonest, I would love to help you get your home.

MortgageEnder

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ACronnisk

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Re: Mortgage 1 year after CP discharge
« Reply #7 on: May 28, 2017, 05:15:57 PM »
 
 
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beaucoup de dentifrices malgré cela c’est merveilleux --’ En attente de vos réponses…
 

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tuneman

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Re: Mortgage 1 year after CP discharge
« Reply #8 on: June 16, 2017, 11:27:36 PM »
I refinanced my home to 65% LTV to at 3.99% with MCAP to pay out my consumer proposal. They are NOT a private lender... they just are not an traditional bank lender like TD, BMO, SCOTIA. Everything went very well and not one hiccup. I plan on selling my home in 2018 so this worked out perfectly to get my proposal paid off.

I have great income and the home is very affordable. No issues with credit score because it was all based on equity. Stay below 75% LTV and a quality mortgage broker will be able to help.



 

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