• Debt Counselling & Credit Rebuilding

  • Debt counselling and credit rebuilding: A fresh start for you and your family

    As a mortgage professional, it’s my duty to make sure the mortgage I secure for you is in your best interest.  Unfortunately sometimes, before you can qualify, you must deal head-on with outstanding issues — like previous or ongoing bankruptcies and/or consumer proposals.  Other issues that might affect you securing a mortgage include: job loss, separation, divorce or inability to manage debt.  All of these can have a devastating impact on your ability to qualify for a mortgage because they can affect your beacon score or credit bureau.

     

    Case study 1

    When I initially met my client couple, she was a full-time student and he a full-time worker for the city they lived in. They had two small children and the rental they were living in was being sold so they had to move within six months.

    Unfortunately, a life circumstance had affected their finances and they ended up seeking a consumer proposal. His beacon score was in the high 500s and she, as a full-time student, did not have a beacon score. Perhaps the only thing going for them was a sizeable gift from a family member.

    Things did not look promising but we started putting a plan together.

    First, we pulled their credit and checked that there were no errors. We also looked for ways to bump up his credit, while establishing hers with a secured credit card.

    Next, we gauged where their financial fitness level was. What does this mean? We had to find out if they had a budget and, if not, we had to build one so they could qualify for their mortgage. Unfortunately, like many people, they had no idea where to start. We looked at everything from rent and utilities, to gas expenses, car insurance, groceries, entertainment and even babysitting to see where they could save. This exercise alone saved them $250/month, which went into paying down their consumer proposal that much more quickly.

    The third step was to determine how much of house they could afford. The key was to work with a realtor who understood budgeting and sticking to the purchase price limit I had set out with them.

    Finally, we looked for a mortgage lender who would allow for the incorporation of their consumer proposal. By doing this, they were able to afford the home they wanted and start off on a healthy financial footing, with no more consumer proposal hanging over their heads and a new budget to guide them forward.

     

    • steps I can take to help you rebuild your credit:
    1. Reach out to me: I’ll 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 starts by building you a budget you can live with and an 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 limits the amount you spend. 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 there’s progress on your credit score, we can move to other means of building credit, like unsecured loans and vehicle loans
    4. Once you have a good credit rating, re-established credit and 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, it can take less than two years!

     

    Case study 2

    This client had recently been discharged from a consumer proposal and had done two mandatory sessions with the trustee. 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 score and let it lapse until his proposal was discharged.

    We sat down and reviewed everything – his income and new debts – and outlined the steps he needed 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, 15 months in, he was sticking to the plan, living in his new home, married and with a child on the way!

    The numbers

    He was paying $1,600/month in rent and utilities

    Consumer proposal: $55,000 – paid over 5 years
    New debts incurred: $15,000
    Eliminated his debt in 26 months and qualified with 5% down on a starter home purchase of $265,000 in Barrie, Ontario.
    Purchase price: $265,000
    Down payment: $13,250
    CMHC default insurance: $5,035

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

     

    Need to deal with outstanding financial issues – like bankruptcies, job loss or divorce? I can help you with debt counselling and credit rebuilding so you can buy the home of your dreams? Give me a call today at 416-697-5443 or email me at [email protected]