Borrower guides
Buying or Refinancing After a Consumer Proposal or Bankruptcy in Niagara
A consumer proposal or bankruptcy does not end your chances of owning or keeping a home. It changes which lender you use, what it costs and for how long. Here is the path back to prime rates, stage by stage, with honest numbers.
Reviewed November 13, 2026 · Indicative figures, OAC
Where you are in the process decides your lender
Lenders look at insolvency in stages. A homeowner who is still making consumer proposal payments is a different file from one who finished two years ago and has rebuilt credit, and both are different from someone recently discharged from bankruptcy. The question is not "is there an insolvency on my report?" but "how long ago did it end, and what has happened since?"
- Typical wait for insured/A lenders
- about 2 years after completion or discharge
- Default insurer minimum credit score (CMHC)
- 600
- B-lender rates (1–2 yr terms)
- 5.49%–6.99%
- Private lender maximum
- 65%–75% LTV
| Your stage | Realistic lender tier | Typical requirement |
|---|---|---|
| In a consumer proposal, payments current | B lender; private for second mortgages | Refinance up to about 80% LTV, or a purchase with roughly 20% down; trustee's letter showing payments up to date |
| Undischarged bankruptcy | Private only, rarely | Trustee involvement; most borrowers wait for discharge |
| Proposal completed or bankruptcy discharged, under 2 years | B lender, some credit unions | Certificate of Full Performance or discharge certificate; new credit reporting well |
| About 2 years after completion or discharge, credit re-established | A lender and insured mortgages possible | Two or more active trade lines with clean history; score at insurer minimums; explanation letter |
Credit reporting rules differ slightly by bureau. As a rule of thumb in Ontario, a completed consumer proposal generally drops off your credit report about three years after you complete it, and a first bankruptcy about six years after discharge. Pull both your Equifax and TransUnion reports and check the dates yourself, because errors are common.
Rebuilding credit so the A lenders take you back
Default insurers and A lenders want to see that new credit has been handled well since the insolvency ended. In practice that usually means at least two active trade lines, such as a secured credit card and a car loan or an unsecured card, often with limits of about $2,000 or more, reporting on time for one to two years. Keep balances well below the limits. One late payment in that window costs more than any other mistake, because it restarts the lender's confidence clock.
Prepare a short, factual letter explaining what caused the insolvency (job loss, illness, separation, a failed business) and what has changed. Underwriters read these, and a clear explanation with stable income since is worth more than a long apology.
Paying off a consumer proposal early with home equity
If you own a home with equity, a B lender can refinance your mortgage and pay the remaining proposal balance to your Licensed Insolvency Trustee in one cheque. The trustee then issues a Certificate of Full Performance, and the proposal is complete years ahead of schedule. Brokers sometimes sell this as a pure win. It is not always. You trade a low-cost A-lender mortgage and an interest-free proposal for a B-lender rate plus fees.
Worked example: renew and wait, or refinance and pay out the proposal
A Welland homeowner's home is worth $485,000. The $300,000 mortgage matures this month, and the current lender offers to renew at 4.54%. There is $22,000 left on a consumer proposal, paid at $611 a month for 36 more months. A B lender offers a 2-year fixed at 5.99%, with a 1% lender fee and a 1% broker fee added to the mortgage, plus $1,850 legal and a $450 appraisal. Both options use a 25-year amortization.
| Item | Renew at A lender, keep paying proposal | B-lender refinance, proposal paid out |
|---|---|---|
| Starting mortgage | $300,000 | $330,918 |
| Loan-to-value | 61.9% | 68.2% |
| Mortgage payment | $1,667 | $2,115 |
| Proposal payment | $611 | $0 |
| Total monthly outflow | $2,278 | $2,115 |
| Total paid over 24 months | $54,677 | $50,767 |
| Owed after 24 months (mortgage + proposal) | $293,732 | $318,627 |
The B-lender mortgage is ($300,000 + $22,000 + $1,850 + $450) ÷ 0.98 = $330,918, so the 2% in fees is $6,618. The refinance lowers the monthly outflow by about $163, but after two years the homeowner owes $24,896 more and has paid $3,910 less, a net cost of about $20,985. That is roughly $8,918 of upfront costs plus $12,067 of extra interest.
What the $20,985 buys: the proposal is complete about three years sooner, so the credit-report clock and the two-year rebuild period both start three years earlier. For some households that is worth it. For others, renewing and waiting is the better deal.
Early payout tends to make sense when the current lender will not renew or will only renew at a poor rate, when there is other high-interest debt to clear in the same refinance, or when the household needs to qualify for something else soon (a move, a buyout) and the open proposal is the obstacle. Run your own version with the calculator above, and compare tiers in A lender vs B lender vs private.
Buying a home after a proposal or bankruptcy
Buying is harder than refinancing because there is no existing equity. During a proposal or shortly after, B lenders typically want around 20% down from your own savings, which on a $485,000 Welland home is $97,000. About two years after completion or discharge, with re-established credit, an insured mortgage with as little as 5% down ($24,250 at $485,000) becomes possible again, subject to the insurer's credit score minimum and the usual 39% GDS and 44% TDS limits at the stress-test rate. Gifted down payments from immediate family are usually accepted with a signed gift letter.
Step by step
- Get your documents from the trustee. Your proposal or bankruptcy paperwork, a current balance or payment-status letter, and the Certificate of Full Performance or discharge certificate when you have it.
- Pull both credit reports and correct any account still showing a balance that was included in the insolvency.
- Open or keep two trade lines and use them lightly, paid in full every month.
- Write your explanation letter: what happened, what changed, and how income has been stable since.
- Compare the paths in dollars. Renew and wait, refinance now, or buy now versus in two years. See renewals and B-lender mortgages.
- Plan the exit from day one: term length, prepayment rights and the date you expect to qualify with an A lender. Start at pre-approval.
Frequently asked questions
Can I get a mortgage while I am still in a consumer proposal?
Yes, usually through an alternative B lender. Homeowners can often refinance up to about 80% of the home's value to pay out the proposal, and buyers typically need around 20% down. Expect higher rates than A lenders, lender and broker fees disclosed in writing, and a short term of one or two years.
How long after a consumer proposal can I get a regular bank mortgage?
Most A lenders and default insurers look for roughly two years after the proposal is completed, with re-established credit such as two trade lines reporting on time. Each lender sets its own rules, and the insurer's minimum credit score still applies.
Is it worth paying off my consumer proposal early with a refinance?
Sometimes. In our Welland example, refinancing with a B lender to pay out $22,000 lowered monthly outflow by about $163 but cost about $20,985 over two years in fees and extra interest. It makes sense when your lender will not renew, you have other high-interest debt, or the open proposal is blocking a move or buyout.
Will my current lender renew my mortgage if I am in a consumer proposal?
Many lenders renew a mortgage that has been paid on time, because a mortgage is a secured debt and is usually not part of the proposal. They may not offer their best rates, and switching to a different A lender is difficult while the proposal is open.
Can I buy a home after bankruptcy with 5% down?
Possibly, once you have been discharged for about two years and have rebuilt credit, an insured mortgage with 5% down can be available, subject to the insurer's credit score minimum and the stress test. Before then, B lenders typically require around 20% down.
Pre-approval & rate review
Get your Niagara mortgage numbers checked
Tell us where you are buying or what you owe. We reply by email, usually within one business day, with options from across the lender tiers.
- A licensed advisor reviews your numbers against A-lenders, Ontario credit unions and alternative lenders.
- Rate holds of up to 120 days on purchases and renewals (lender-dependent).
- On prime files the lender pays the brokerage, so there is no fee to you; any fee on alternative or private files is disclosed in writing first.
- Nothing goes to a lender or credit bureau until you say so.
Prefer email? Write to hello@mortgageniagara.com.