Yes, in Canada it is still possible to finance 100% of a property's value if you know the rules and criteria.  Here's an illustration of how a zero-down mortgage works today.

What if you knew up front that a nice new vehicle means a smaller / older house?  Would you still buy one? Would you want to know that before you signed that auto-loan agreement?  I hope so!

The credit score is used by most companies to decide if the applicant is a good credit risk or not. Equifax and Trans Union will calculate the numbers from the credit report and generate a number between 300 and 900.

Mortgages 101

When shopping for a mortgage, most consumers believe securing the best interest rate is their first priority.  However, obtaining the best rate does not always ensure you get the best mortgage!  A good approach is to look at the individual features of the mortgage as well. It need not be overwhelming!

Remember these five golden rules if you'll be applying for a mortgage:

#1. Clean up your credit history. A few months before applying for (or renewing!) a mortgage, review your credit report and check for any discrepancies. You can access your credit report from www.Equifax.ca or www.TransUnion.ca, where you can check your report for free, or call me.

Hey - if you are reading this, tell everyone you know that if they ever want to buy a house, you have to work on your credit score well in advance.

Debt Consolidation
In deciding whether to approve a mortgage application, lenders will look at the client's credit score and their existing debt-to-income ratios.  The later shows the client's existing monthly payment obligations on loans, credit cards, etc. relative to their gross household income and if you have too much monthly debt or a low credit score then your chances of getting a mortgage approved are reduced.

One of the fastest ways to build up your credit score is to clear up debt. And one of the quickest ways to clear up debt is to consolidate high interest credit card debt on to one easy to manage loan. If you stretch out the time frame over which you repay the debt consolidation loan, then your monthly payment obligation will go down and your debt-to-income ratio will improve along with your credit score, hence increasing the prospect of getting your mortgage approved.

Sounds like a magic pill, doesn't it! And it works, but...

(And there is always a BUT). Be clear that the the REAL PROBLEM has not been solved. Debt consolidation might make you think you've done something about a debt problem and moved you closer to or into a mortgage. BUT the debt is still there, as are the habits that caused it. And those habits are the real problems that needs addressing.

Yes, a debt consolidation loan might help you manage your finances in such a fashion as to get approved for a mortgage. We can even show you how. The truth remains, however, that you can't borrow your way out of debt. So simply put, habits must change - you either have to earn more or spend less - it's that simple.  

Why I am okay with debt consolidation loans is that most of us have to pay for accommodation one way or another - either as renters or home owners.  When you are a homeowner, you are building financial security because you are paying down your mortgage and the home appreciates in value over time. So as you work to get your financial house in order, you may find that a debt consolidation loan is on your pathway to homeownership.

Let me know what you think about this strategy.  Does it make sense or are you digging a deeper hole?

My spouse and I have been ING Direct customers since early 2001 when they first came out in Canada and often recommend it without any reservation to our friends and family as a truly great financial management tool.  This is especially true now that I am a mortgage broker helping people get into homes.  It helps you save your money and earn interest considerably higher than the average of the major banks.

First-time homebuyers who are Canadian residents can withdraw up to $25,000 from their RRSP TAX FREE. Through Canada’s Home Buyers Plan (HBP) you and your spouse can each withdraw up to $25,000 (as of the 2009 federal budget) to build or buy a qualifying home.

Yes, you can get a mortgage.  Your required down payment will depend on where you want to buy,  how long since your bankruptcy (or OPD) discharge, and how much you have re-established your credit.