Home ownership is an important milestone for many, and determining a game plan to achieve that while dealing with a consumer proposal can be confusing. Good news! We’re here to help. We have answers to popular questions about how mortgages work while in a consumer proposal contract.
I don’t own a home. How soon can I buy one if I have a consumer proposal contract?
This is a really common question. So if that’s why you’re reading this, you’re not alone! The first step in this scenario is completely paying off a consumer proposal before taking on a huge debt like a mortgage.
If you save a down payment of at least 20%, you could qualify for a mortgage immediately after you complete your consumer proposal contract.
If you have a down payment of less than 20%, that’s okay! You just have one more hurdle. You’ll need to have at least two years of clean, new credit after completing your consumer proposal contract. Our Licensed Insolvency Trustees (LIT) can help you determine what you need to do to rebuild your credit so you’re set up to take on a mortgage.
I already own a home. Can I refinance my mortgage to pay off a consumer proposal?
Yes! This can be a quick way to settle your debts. There are a few things to consider before taking this approach.
First, there needs to be enough equity in the home. You won’t get your home financed for more than it’s worth, so it needs enough equity to cover the amount of the loan. Second, the reason for the consumer proposal will also be reviewed by the mortgage lender. The story of how the consumer proposal came to be matters, and indicates whether there’s a risk to the lender.
Credit history and employment status will also be looked at to determine creditworthiness. Our LIT team can help you work through these details.
How is refinancing my mortgage helpful in paying off a consumer proposal?
The biggest reason why people refinance is to start improving their credit score quickly. A consumer proposal must be completely paid off before you begin fixing bad credit.
Additionally, refinancing may result in lower monthly payments, and it can also make life easier when making most purchases. If you need a new car or other important purchase, you’ll be able to pass a basic credit check.
Who can I talk to for help?
Figuring out your next steps can be overwhelming. We understand and we’re here to help. One of our LITs will have an initial, confidential meeting with you to learn your financial situation and where you need assistance. By the end of the meeting, we’ll outline possible options and a personalized plan. Book an appointment today.