You’ve taken the first step towards a fresh start by filing a consumer proposal and putting your past debt behind you.
Or perhaps you are considering the consumer proposal option but want to know how it will affect your achieving your long-term goals. Fortunately, there is a light at the end of the tunnel. You can work towards your financial goals while you are paying your consumer proposal. Once your consumer proposal is completed, it may be possible to qualify for an insured mortgage in as little as two years. Let’s talk about how to do that.
First of all, once your consumer proposal has been approved by your creditors, you can start saving immediately. You’ll need that 5%-20% down payment for an insured mortgage.
Secondly, start rebuilding your credit by applying for credit. You will likely need to give a security deposit to the financial institution so you need to have some funds saved for this purpose. Obtaining a credit card that reports on your credit bureau while you are paying your consumer proposal will help increase your credit score. The idea is not to incur new debt, but rather to improve your credit score in order to assist with future goals. To achieve this without risk of falling into debt, we recommend you put an expense (ie. telephone or utility bill) on your credit card and then set the credit card up for automatic payment from your bank account. You don’t even need to carry the credit card with you to have it reporting each month on the credit bureau.
Thirdly, if you can, pay off your consumer proposal ahead of schedule. The consumer proposal stays on your credit history for three years after you’ve completed the terms. The sooner the consumer proposal is paid off, the sooner you can apply for a mortgage.
Finally, after you’ve completed your consumer proposal, make sure you have two credit facilities reporting to your credit bureau. You will need at least two years of clean credit history before you can qualify for an insured mortgage.
To find out more, contact D. Thode & Associates Inc. and their experienced Licensed Insolvency Trustees can help answer these and other questions you may have.