Quick answer
Can you get a mortgage after a consumer proposal in Canada?
Yes. B lenders and private lenders can lend during a proposal or soon after it is paid off, usually with 20% or more down and at a higher rate. To qualify with a bank or for an insured mortgage with 5% down, expect to need the proposal fully paid and about two years of re-established credit. The proposal comes off your credit report 3 years after completion or 6 years after filing, whichever is sooner.
Consumer Proposal vs Bankruptcy for Mortgage Purposes
A consumer proposal is a legal agreement, arranged through a Licensed Insolvency Trustee, to repay part of your unsecured debt over up to five years. Lenders see it as less severe than bankruptcy, and it clears from your credit report sooner, so the path back to a mortgage is usually shorter.
A mortgage you already have is not included in a consumer proposal. If you keep making the payments, you keep your home.
How Long a Proposal Stays on Your Credit Report
The two credit bureaus measure it slightly differently:
| Bureau | Removed after |
|---|---|
| Equifax Canada | 3 years after the proposal is paid in full, or 6 years from filing, whichever comes first |
| TransUnion Canada | 3 years after the proposal is paid in full, or 6 years from the date of default, whichever comes first |
Your Options by Stage
What is realistic depends on where you are in the process:
| Stage | Typical options | Down payment |
|---|---|---|
| During the proposal | Private lenders; some B lenders with strong equity | Often 20-35% |
| Proposal just paid off | B lenders | Usually 20% or more |
| Paid off + ~2 years re-established credit | A lenders, insured mortgages | As low as 5% (insured) |
What "Re-Established Credit" Means
For insured mortgages and most A lenders, it is not enough for the proposal to be finished. You need to show new, well-managed credit, typically:
- At least two active credit accounts, such as a secured credit card and a car loan or line of credit
- About two years of on-time payments on them
- Low balances, ideally under 30% of each limit
- A credit score in the mid-600s or higher
Start rebuilding while the proposal is still running. A secured credit card opened in year one of the proposal is two years old by the time you need it.
Using a B Lender as a Bridge Back
Many borrowers use a one- or two-year B lender mortgage to buy sooner, then move to an A lender at renewal once their credit is re-established. The trade-off is a higher rate, a lender fee, and often a broker fee for that first term.
This works well when the numbers are checked up front: compare the extra cost of the B lender term against how much rents or prices might rise while you wait.
Renewing an Existing Mortgage During a Proposal
If your mortgage comes up for renewal during a proposal, your current lender will often renew it, sometimes without a new credit check, as long as payments have been on time. Switching to a new lender mid-proposal is much harder. Talk to your lender or a broker a few months before renewal rather than signing the first offer by default.
A Step-by-Step Plan Back to an A Lender
- Keep every proposal payment on time and get your certificate of full performance when it is paid off
- Open a secured credit card early and use it lightly every month
- Add a second trade line, such as a small loan or line of credit
- Pull both credit reports after completion and make sure the proposal and included debts show as settled
- Save a down payment. 20% opens up B lenders right away, and 5% works once you qualify for insurance
- Talk to a mortgage broker about 6 months before you want to buy, to see which lenders fit your timeline
Frequently asked questions
How long after a consumer proposal can I get a mortgage?
With a B lender or private lender, possibly during the proposal or right after it is paid off, usually with 20% or more down. For an A lender or an insured mortgage with 5% down, typically about two years after completion with re-established credit.
How long does a consumer proposal stay on my credit report?
On Equifax, 3 years after it is paid in full or 6 years from filing, whichever comes first. On TransUnion, 3 years after it is paid in full or 6 years from the date of default, whichever comes first.
Can I get a mortgage while in a consumer proposal?
Yes, but usually only through private lenders or some B lenders, with significant equity or a large down payment and at higher rates and fees.
Will a consumer proposal affect my existing mortgage?
No. A mortgage is secured debt and is not included in a consumer proposal. If you keep making payments you keep your home, and your lender will often renew it if your payment history is good.
Is it easier to get a mortgage after a consumer proposal or bankruptcy?
Usually after a consumer proposal. It is viewed as less severe than bankruptcy and is removed from your credit report sooner.
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