Will a Consumer Proposal Affect My Mortgage Renewal

If you are reading this then you are most definitely wondering ‘Will a consumer proposal affect my mortgage renewal?’.

You are not alone.

A consumer proposal typically does not impact a mortgage renewal. In every client instance, that our office has assisted with, we haven’t had a single client experience any issues in renewing their mortgage. In certain instances the rate the bank offers you might be slightly higher than ‘market’ rates, but even that is exceptionally rare.

It isn’t really in a bank’s best interest to NOT renew. They are very well aware that while in a consumer proposal your mortgage options are limited, especially if you have less than 20% equity in your property. The last thing the banks want is for you to default on your mortgage obligations and be forced into foreclosure where they may take a loss.


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Does a consumer proposal impact my mortgage rate?

This is a slightly more complicating subject. In most instances, upon renewal, a consumer proposal will have no effect on the rates offered. They will simply be the rates typical of the product and increase/decrease with interest rates.

However, if you are looking to purchase a house and/or refinance your interest rates will typically be a bit higher until it is paid off and you have rebuilt your credit, as your mortgage product will typically be issued through a ‘B’ lender (lender who lends in riskier situations). While interest rates are higher here, they are not as high as private mortgages which usually range from 8-20% per year. B lenders are usually 1-2% higher than a traditional mortgage.

Can you still get a mortgage with a consumer proposal?

Obtaining a mortgage with a consumer proposal is certainly more difficult than normal. Until your proposal is paid off for 2-3 years, you will typically require a significantly larger down payment compared to normal. It is important to begin savings and effectively rebuilding credit as soon as your proposal is approved by your creditors. For more information and greater certainty, it is recommended you speak with a mortgage broker.

How long does it take to rebuild credit after consumer proposal?

A consumer proposal will be reflected on your credit history report for a maximum of 6 years, or 3 years after the date you finish paying your consumer proposal (whichever is soonest). It typically takes 2-3 years to re-establish a credit rating above 650+. However, this is highly dependent on your credit rebuilding plan. Our Clients for Life and financial rehabilitation services include credit rebuilding as part of every restructuring plan.

Will I lose my house in a consumer proposal?

In nearly every instance you will not lose your house in a consumer proposal. A proposal, unlike a bankruptcy, doesn't require assets to be surrendered to creditors. Any realizable equity in your property forms part of your offer. EI: If you have $10,000 of equity (after fees/etc) you would want to offer a minimum of $10,000 in your proposal to compensate for this. It is recommended you speak with a professional to review your situation.

Debt Relief SpecialistThis article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again.

We are proud members of the Canadian Debtors Association. We work for you, not your creditors.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. 4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.