Posted: 2 Dec '19

Key Questions About Mortgage Renewals After Consumer Proposals

When your current mortgage reaches maturity, you will need to renew your mortgage to cover the existing balance. However, if you have recently entered a consumer proposal, your renewal may be affected.

While a consumer proposal does ease the burden of mounting debt and monthly cash flow, it can severely impact your credit rating. Many conventional lenders will withhold any additional credit until you can prove you are once again creditworthy.

What Does a Consumer Proposal Do for You?

If you have reached the point, for whatever reason, that your accumulated debt is overwhelming, a consumer proposal may be necessary to alleviate the problem and reduce your monthly payments.

How Does a Consumer Proposal Work?

You Can:
  • Consolidate any unsecured debt under Canada’s Bankruptcy and Insolvency Act
  • Eliminate some of the total balance, in most cases
  • Reduce debts according to your current income and what you owe
  • Get assistance from a Licensed Insolvency Trustee to help with the proposal to your creditors
  • Pay the agreed amount over the course of up to five years

Can You Keep Your House?

Yes, you may keep your house and accumulated equity along with other assets. Consumer Proposals only deal with unsecured debt, like credit cards and consumer loans. You must continue to make full and timely mortgage payments or your lender may choose not to renew your mortgage, and worst case they can even foreclose on your home.

How Likely are Mortgage Renewals After Consumer Proposal?

Under normal circumstances, your existing mortgage lender will send you a renewal notice before your current loan expires. This does not mean you automatically qualify for a renewal.

Some mortgage lenders check credit scores to determine if the borrower has credit problems or their employment has changed notably, they may elect to not offer mortgage renewals after consumer proposals.

If your existing mortgage lender has turned you down, where can you go to obtain a new mortgage renewal?

It is more difficult to get a mortgage renewal from a conventional lender if your existing lender has refused because of your credit difficulties. Generally, the Canadian banks view defaults, consumer proposals, and bankruptcies in the same negative light. Fortunately, there are equity lenders who offer mortgage renewals after consumer proposals even though your credit rating has fallen.

Contact Bad Credit Mortgage Broker Services

If your credit rating has taken a dive, Dominion Lending Bad Credit Mortgage Brokers strive to help secure mortgage renewals after consumer proposals. A bad credit mortgage loan or renewal may only be needed for one to three years until you have rebuilt your credit rating.

Homeowners searching for mortgage renewals after consumer proposals should contact us today for a personal consultation. We know that not being offered a renewal by your bank is a traumatic and emotional experience and we will help you bridge the gap to a more favorable mortgage situation.

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