You are planning to buy a house either for yourself or for your family but have one thing that keeps on preventing this from happening: debts. You have debts that have been left unattended lately and are now causing you a great deal of pain-in-the-neck.
In today’s blog, we are going to explore if you can purchase a house despite having outstanding obligations to settle or concealing a bad credit score and hoping this will not surface any time soon.
This is sure to be a short one because we do not want to beat around the bush regarding this issue.
If you’re ready then let’s go…
House Buying and the Debt Trap
You find yourself scouring through pages of advertisements about properties on sale – their location, their overall size (either in feet or in meters), their amenities, etc. – and found the house you have always dreamed of owning.
You excitedly call up your mortgage advisor and told him/her about your decision to purchase the property. However, when they reviewed your credit standing and your financial outlook, your advisor shook his/her head and told you, “We have a slight problem with your current finances. You are in debt and some of them had been declared delinquent.”
Is it such a hassle to buy a house while having active outstanding payables to cancel out? The answer is a resounding, “Yes, it is!”
Many house buyers, most especially first-time property buyers, will risk their financial standing by acquiring a house even while having debts.
One of their reasons for doing this is that their lenders might “develop a soft heart” and allow them to borrow a huge amount of money not only to cover the mortgage loan but also to shoulder their other expenses.
At first, this may sound humanitarian: someone aiding another one with money to alleviate his/her current money and credit issue is a good thing to do towards a borrower and a huge boost for lenders to be trusted and relied upon.
But this is not the case since buying a house with debt is a high-risk business move that will only lead to further loss both for the house buyer – YOU – and the lender, respectively.
You need to seek assistance from reliable credit fixing companies for better guidance and more options in securing your dream residence.
Do this to avoid dying out from your financial negligence and near-sighted accountability.
Ins and Outs of House Buying and Bad Debt
As much as we do not want to discourage you from buying a house, we need to inform you of the advantages and disadvantages of currently consolidating debts and planning to purchase a good-valued property simultaneously.
a. Build Equity – if you are coming from a rent-your-house scenario then acquiring your own house will allow you to create and accumulate equity on it. Remember that this equity can be utilized to pay off your debts and in other situations that require money to begin with.
b. Tap into the Property Market – having outstanding debts will force you to purchase a house that is easier on your wallet. Acquiring insider information regarding the current market prices of houses will give you an edge if you are to purchase immediately because of the low price point rather than later should you decide to prioritize extinguishing much of your debts.
c. Commit to Make a Prudent Purchase – patience is a virtue and you badly need this one if you are intent on pursuing to buy a house while juggling your debts. If you chance upon inheritance or you have luck on your side by sporting an easy catch housing deal then buying your dream property while still having debt is very much worth your effort and time.
a. End up being House Poor – if you add your monthly mortgage to your current list of debts to settle then you may not have enough money left to support your day-to-day life and this will impact your normal existence. This means your overall expense is greater than your net assets.
b. Acquire a Smaller Loan – your lenders will only give you an amount commensurate to your finances based on your current earnings and latest credit report. You are considered a high-risk borrower and they will not compromise their investment over humanitarian reasons.
c. Handle priorities – you will find yourself guttered if you fail in prioritizing what debt to settle first and so on. With delinquent debts waiting to be written off and your monthly mortgage needing to be paid in time, you are now challenged to manage your finances wisely. Failing at this means placing all of your assets at risk.
You stand to lose more and gain little if you continue pursuing your plan of buying a house with several debts dangling in front of you.
There are several excellent credit repair processing companies in Canada that specialize in rebuilding your credit stature so that you become a non-risk borrower.
Do your research properly and seek their assistance the soonest.
Practical Advice for Purchasing Property with Debts-to-Settle
Below are tips for you to make your house purchase a breeze despite having debts hanging over your head.
a. Handle your Debts Properly – this one is self-explanatory. Properly managing your debts and making sure all of them are paid on time will help you in improving your credit score and financial situation.
b. Re-assign your Debt – this is mostly applicable to high-interest-bearing debt like credit cards. You have the option to port this one to a line of credit. LOCs have lower interest rates making it easier for you to settle them immediately.
c. Maximize Down Payment – if you can afford to pay the highest down payment available then do so. This will greatly impact your mortgage loan approval since the borrowed amount will be assessed against your liquid assets.
d. Earn More – don’t change jobs if you are planning on acquiring property and on paying off a large chunk of your debt. Either target promotion in your office or add means of generating further income (i.e. selling online).
e. Plan in Advance and Monitor Extra Costs – there are miscellaneous costs included in the purchase of a new house. Be wary of these and make preparations for a backup financial support system so that you have something to fall back on if your situation goes bitter.
Despite these issues, you can still steer clear from all trouble and even succeed in getting a mortgage loan with poor credit. Just talk to any reputable mortgage specialist and/or credit repair advisor to jumpstart your drive towards a debt-relieved person.
Buying a house with debts hanging out from your shoulders is not a good way to start your dreamy adventure with your home. Your debts will pull you down as well as destroy your reputation to many lenders.
While many speculate on the possibility of one owning a house despite being debt-riddled, it is not too impossible for anyone to acquire a house.
We suggest that you have your credit score checked either monthly or quarterly to give you a quick snapshot of how you are doing as a responsible person. Likewise, seek assistance from verified credit repair experts to further aid you in dismissing all of your debts for good.
We are your mortgaging and credit repair experts for 9 years running with offices in and around Canada. Our expertise lies in credit rebuild and credit score assessment led by our founder Faizal Garasia, an authority both in credit relief and mortgage transactions.
Please call +1 647-373-9651 or email us at [email protected] to learn more.