28 Apr, 2021
paying a consumer proposal with a mortgage

Filing a Consumer Proposal & Getting a Mortgage

Did you know that you can use your home equity to get a mortgage to pay out a consumer proposal?

If you filed for a consumer proposal recently, you might be wondering how soon after this you can buy a home or refinance a mortgage

Usually, when people file a consumer proposal, it is to assist them with debt consolidation by restructuring it all into one manageable payment. Once they’ve done this, homeowners usually see significant cash flow relief but still have this monthly bill looming over them. 

If you are living in British Columbia and are looking for debt load relief by paying out your consumer proposal early, then keep reading!

Finding Debt Relief By Paying Out a Consumer Proposal Mortgage Early

The main benefit of paying out a consumer proposal early is that your credit score will recover instantly. 

Many mortgage lenders, especially banks and credit unions, will want to see a consumer proposal 24 months discharge form before approving any type of loan. This includes, of course, mortgages

However, if your mortgage payments are on time, and you can provide a 20% down payment plus paperwork showing you’ve been rebuilding your credit, some lenders will consider approving your loan. 

The B-Lenders we work with in BC offer products that will allow you to refinance your 1st mortgage to pay out a consumer proposal, including it into the loan. This enables you to clear out the consumer proposal fast, and start improving your credit right away.

Types Of Financing & Mortgage To Pay Out a Consumer Proposal

There are three main ways a homeowner can use to pay out a consumer proposal mortgage through financing.

Mortgage Financing

Large banks don’t get involved in financing consumer proposals. As reputable mortgage brokers, we have access to B-Lenders and private mortgages that will, sometimes, consolidate a consumer proposal into a 1st mortgage.

Keep in mind that this requires you to pay out your 1st mortgage in order to consolidate it into the mortgage to pay out a consumer proposal. 

Second Mortgage Financing

Second mortgage financing is another way to use a mortgage to pay out a consumer proposal through a home equity loan

With home values going up, you can tap into the equity built up in your home which, in some cases, ends up being far cheaper. This option allows you to keep your 1st mortgage in place at the best rate possible, and to pay out the consumer proposal instantly. 

Once your 1st mortgage comes up to maturity, you can consolidate the 1st and 2nd ones back at a major bank, usually within 2 years.

Financing Companies

There are also financing companies that can provide you with a loan to pay out a consumer proposal. 

These loans usually come with a very high-interest rate and short-term conditions. The benefit is you are paid out of the consumer proposal right away. The con is you are stuck with another high-rate, large payment loan, which can trigger future payment issues.

Wrapping It Up

In conclusion, borrowers may have many reasons to pay a consumer proposal sooner rather than later. Among the main ones are the need to get a mortgage renewal, rebuild credit history, get rid of bad credit, or improve cash flow. 

If you are a homeowner in BC, Canada, looking for professional advice on how to qualify for a mortgage to pay off a consumer proposal, simply get in touch. 

We’ll discuss your particular financial situation thoroughly and help you find the road to financial freedom!

In the meantime, take a look at some of these helpful posts:

How To Get Pre-Approved For A Home Loan

Getting A Home Equity Loan With Bad Credit

How Many Mortgages Can You Have In BC

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