Can I Get a Mortgage After Bankruptcy?

The idea of securing a mortgage after bankruptcy might seem implausible to some. However, contrary to common misconceptions, it’s not impossible. This article aims to demystify the process of obtaining a mortgage post-bankruptcy and offer valuable insights to help you navigate this journey.

Understanding Mortgage After Bankruptcy

The Misconceptions

Bankruptcy is often seen as a financial death sentence, particularly when it comes to securing loans. However, this is a myth. It’s absolutely possible to secure a mortgage after bankruptcy, and many Canadians have successfully done so.

The Reality

While bankruptcy does impact your credit score and report, it doesn’t mean you’re ineligible for a mortgage. Lenders may consider your application two years post-discharge, provided you’ve worked on rebuilding your credit. Interestingly, some lenders might even view you as a lower risk, given your debt-free status post-bankruptcy.

Keeping Your Mortgage During Bankruptcy

If you already own a home and have an existing mortgage at the time of declaring bankruptcy, it’s possible to retain your property. Your Licensed Insolvency Trustee (LIT) will work closely with you to ensure maximum payback to creditors while considering your assets’ value.

The Process

If your property’s value is equivalent to what you owe on your mortgage, the trustee may allow you to keep your home and continue with your payments. Essentially, this allows you to have a mortgage even after declaring bankruptcy.

Renewing Your Mortgage After Bankruptcy

The renewal of your mortgage after bankruptcy can be a bit tricky. Here’s what you need to know:

Your Current Bank

If you’ve been making regular mortgage payments during bankruptcy, your current bank will likely allow you to renew your mortgage. This is because banks generally prefer to continue receiving payments and interest rather than foreclosing a property.

Other Banks

Securing a mortgage with a different bank post-bankruptcy might be challenging but not impossible. It’s crucial to conduct extensive research and approach lenders familiar with bankruptcy cases.

Qualifying for a Mortgage After Bankruptcy

You could potentially afford a home as early as two years after discharge from bankruptcy, often at rates and down payments similar to those who never filed for bankruptcy.

Rebuilding Your Credit

The first step to qualifying for a mortgage after bankruptcy is rebuilding your credit. Securing a credit card post-bankruptcy and making timely repayments can significantly elevate your credit score.

Conducting Research

While rebuilding your credit, it’s also crucial to research and prepare for other factors that lenders consider while approving a mortgage. This includes maintaining a steady income, saving for a substantial down payment, and being mindful of the property’s condition and value.

Timing Your Application

It’s advisable to apply for a mortgage at least two years after discharge from bankruptcy. This allows sufficient time to rebuild your credit and establish financial stability.

Types of Mortgages After Bankruptcy

Depending on your financial circumstances and credit score, you may qualify for different types of mortgages post-bankruptcy.

Traditional or Prime Insured Mortgage

A traditional mortgage offers the best rates. To qualify, you need to have been discharged from bankruptcy for at least two years and possess a year of reestablished credit.

Subprime Mortgage

If you don’t qualify for a traditional mortgage, a subprime mortgage might be an option. You can apply for a subprime mortgage three months to a year after discharge from bankruptcy.

Private Mortgage

A private mortgage, though featuring higher interest rates, can be secured immediately after discharge from bankruptcy.


Filing for bankruptcy doesn’t mean the end of your homeownership dreams. With careful planning, diligent credit rebuilding, and strategic financial management, you can qualify for a mortgage after bankruptcy. Remember, being debt-free is a fresh start, not a financial tombstone.

If you’re wondering, “Can I get a mortgage after bankruptcy?”, expert guidance from a Licensed Insolvency Trustee can provide much-needed clarity and direction. Take the first step towards your financial recovery today. You owe it to yourself.

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