A large number of Canadians will deal with bankruptcy or debt settlement issues at some point in their lives. An even larger number will deal with a poor credit rating. However, many of these people will also want to get a mortgage at some point as well. It’s not impossible to get a mortgage with poor credit. However, it comes with some consequences.

For starters, the amount of the down payment required for a mortgage will be higher for those with poor credit. Banks could want to see as much as 25% of the value of the home as a down payment before they will consider lending the money for the balance of the cost.

In addition, the interest rate could be significantly higher than the average rates. These higher rates are often referred to as “sub prime”, as they are not the optimal lending conditions for the bank. In other words, the banks consider these loans to come with more risk as a result of the poor credit rating.

It is important to establish a relationship with people along the journey of buying a home. This goes for real estate agents and lawyers. It also applies to your bank as well. If there is a story behind your poor credit, the banks could possibly provide a tad more leniency, For example, a bank may be more forgiving in a cease of medical emergency leading to poor credit, as opposed to a person that is an over-spender and consistently late in making repayments.

When choosing a home to purchase, it is also important to consider factors such as re-sale value as well as local property values to ensure that the property you are looking to purchase will be of value. It is also important to avoid assuming any high debt loads shortly after any insolvent issues.

In many cases, the best cure for poor credit is a combination of ‘time’ and ‘repayment’. In other words, if you have poor credit, it is a good idea to re-establish your rating by working hard to consistently pay your bills on time for an extended period of time. Make sure to pay your phone, cable, credit cards or car payments on time over an extended period to prove that you are worthy of getting a mortgage.

Re-establishing your ability to borrow after a period of poor credit takes discipline and planning. If you are willing to take the necessary steps, you could see your chances of qualifying for a mortgage increase over time.