31 Aug, 2021
filing a consumer proposal in bc

What Is a Consumer Proposal And How It Can Affect You?

Unique financial situations come into play for many people, and choosing a consumer proposal is something that some Canadians living in BC turn to when debts and other bills put them at risk of losing their homes.

I have personally witnessed clients that have had great success going through these debt consolidation programs. But there are things to be aware of, as debt owed to the same institution that holds your mortgage is something you should consider before including it into your restructuring.

I know how difficult it is, as a mortgage broker, to cover all the aspects of a transaction, both current and future, and the effects these may have on the clients. Probably, it’s similar to what credit counsellors from BC consider when structuring a consumer proposal.

One thing I see often is clients calling me up one or two years after they have entered a consumer proposal. Sometimes they ask, “How will the consumer proposal I made in BC affect my chances of having the mortgage renewed by the bank?”. Other times they are in a panic and are telling me, “My bank will not renew my mortgage due to my consumer proposal.”

There are many things a counsellor should consider when preparing a consumer proposal for BC clients, such as reducing as much debt for the client and getting the best payment structure to maintain a successful repayment program. 

How To Deal With Renewals If You Have a Consumer Proposal?

woman and mortgage broker discussing consumer proposal

The one thing I see as a mortgage broker dealing with renewals, or refinancing mortgages for clients that have gone into a consumer proposal, is that the debts owed to the same bank that holds the mortgage payments are causing issues at the time of renewal.

It can be more costly to refinance your existing mortgage if your bank will not renew your loan due to you walking away from a small credit card or an unsecured Line of Credit

Before including these debts, I would have a long talk with the branch manager where my debt is held to get some assurance that the debt owed will not affect my mortgage renewal.

I have seen clients go through with the proposal only to have the bank not renew 3 years later. In such situations, clients have no options available to refinance and end up being forced to sell. 

Wrapping Up 

If you are a BC resident and are considering a consumer proposal as a way to save your home, make sure you keep your current mortgage lender happy and discuss in length what debt you should or should not include.

For more questions on consumer proposals or private lending in BC, don’t hesitate to get in touch! At Your Equity, we will be happy to speak with you and provide options from 9am to 9pm, 7 days a week.

If you enjoyed this article, you might also like:

BC First-Time Home Buyers’ Programs & Mortgage Options

Using a Home Renovation Loan For Fixer Uppers

Fixed Rate Home Equity Loans Are a Smart Choice As Bank Rates Rise



2 thoughts on “Consumer Proposals And Mortgage Renewals In BC: What You Need To Know

  • Kellie

    February 20, 2019

    I am considering a consumer debt proposal but doing some research into this. We do not have to refinance but just renew.I have a cc and we have a joint line of credit with the same bank as our mortgage, so very concerned about moving forward with the consumer proposal. ANY help / advice would be appreciated

    1. Jeff Di Lorenzo

      February 20, 2019

      Hi Kellie

      Thanks for your question. You should double check with your proposal officer but if you do a consumer proposal and include debts in the proposal with the same institution that holds your mortgage the bank may not offer a renewal. If you have additional questions please feel free to call me to discuss further. 778-839-3963

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