Can You Buy a House While in a Consumer Proposal?

Purchasing a House While Doing a Consumer Proposal: Is It Possible?

Owning a home is a dream for many, but financial challenges can make this aspiration appear elusive, especially if you’re under a consumer proposal. The question that often arises is: Can you buy a house while in a consumer proposal?

The Short Response

In legal terms, nothing inhibits you from purchasing a house during a consumer proposal. However, practical obstacles may arise due to your impaired credit rating, which could hinder you from securing the necessary mortgage.

Diving Deeper: The Complex Reality

The Challenge of Mortgage Approval

Typically, most creditors are reluctant to approve a mortgage application if the applicant is under a consumer proposal. It’s not a personal bias, but rather a reflection of the financial risk associated with lending to someone who’s already struggling with debt.

Renewing Mortgages During a Proposal

Interestingly, while obtaining a new mortgage can be a hurdle, renewing an existing mortgage during a consumer proposal is a possibility. However, it’s important to note that your interest rate might be impacted due to your financial situation.

Preparing for a Mortgage Post-Proposal

You can use the period of your consumer proposal to save towards a down payment for a house. Once the proposal is discharged, you can then apply for a mortgage. However, if your proposal includes a mortgage shortfall, you may encounter obstacles in qualifying for further CMHC insurance, requiring you to accumulate a larger deposit.

The Misconception About Borrowing During a Proposal

It’s a common misconception that individuals under an undischarged bankruptcy or consumer proposal are prohibited from borrowing money. This isn’t entirely accurate. While traditional lenders like banks may shy away, other lenders might be willing to extend credit.

Refinancing: A Potential Solution

If your home has appreciated in value midway through your consumer proposal, refinancing could be a viable option to pay off the proposal. This strategy can help you reestablish your credit faster as a consumer proposal is removed from your credit report three years from when it’s fully paid.

The Criteria for Lender Selection

Finding a lender willing to finance your home purchase after a consumer proposal involves a few key steps:


  • Hunt for lenders who are open to lending to individuals under a consumer proposal or undischarged bankruptcy. If this information isn’t readily available on their website, don’t hesitate to call and inquire.
  • Understand that lenders will probably require collateral security, such as a home or vehicle, especially if you’re in a consumer proposal. Be upfront with potential lenders about the assets you possess.
  • Be ready with all relevant information about your collateral, including its value and any existing debt against it, to facilitate a detailed discussion with potential lenders.


Final Thoughts

Can you buy a house while in a consumer proposal? The answer isn’t a straightforward yes or no. While legal barriers do not exist, practical challenges may make the process more difficult. However, with the right strategy and a bit of patience, it’s certainly not impossible.

Should you have more questions about consumer proposals, don’t hesitate to reach out and ask. Alternatively, you can visit our Consumer Proposal Questions page to explore more commonly asked questions and their answers.

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