COVID-19 Q & A: Is It Possible to Renew a Mortgage While In a Consumer Proposal?

Published: April 15, 2020 Last updated: July 12, 2022 at 22:59 pm

What’s the Best Mortgage Renewal Strategy While Still In a Consumer Proposal During the COVID-19 Crisis?

Last week a lady visited our website, downloaded our No form found for homeowners in a consumer proposal, and then wrote Ross asking “Can I renew my mortgage while on consumer proposal? If yes, can I refinance my mortgage, get a secured line of credit (from the equity) and pay off the consumer proposal ?

Ross answered as follows:

Thanks very much for coming to our site and downloading our e-guide. We have lots of free mortgage, credit and consumer proposal information in our Resources. You are asking a terrific question – it might be easier if you grab a slot from my schedule (including this weekend) and we have a short call and I can explain things to you. If that suits you, please click here

For your situation, we are in a complete period of transition with the mortgage industry right now. COVID-19 is playing a big part in that.

Generally, renewals with A-lenders (especially banks) are fairly seamless even if you are in a consumer proposal. That said though, you would NOT want to ask your current lender for a home equity line of credit, or to increase your mortgage, at this time. That would bring unwanted attention to your situation and might even cause them to pull back the renewal offer and present more expensive terms to you.

Renewal is perhaps the best time to look at a totally different mortgage solution – since you would not be facing any prepayment penalties if you switched lenders. There would have to be decent equity in your home; it would have to be marketable and your income and employment would have to stand up to (COVID-19) scrutiny. And lenders do care about whether or not you have begun to rebuild your personal credit history too.

If these things are all in favour, you might be able to work with a B-lender who could provide a single mortgage solution allowing you to pay off your consumer proposal balance.

Prior to March 2020, we were often solving this problem with a private second mortgage – but these are very hard to source at this time.

Hope this helps. Like I said, please call or book a call if you wish to look at this more carefully.

Note: There is so much to explain about mortgage refinancing that I created my own mortgage refinancing FAQs page. At this page we have listed many of the questions that come up as we help our own clients refinance their home mortgages. Real Canadians with real issues. Perhaps you will find your question there.

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​Ross Taylor
One of Toronto/GTA's Most Trusted and Knowledgable Mortgage Agents

Ross Taylor is recognized by his peers as one of Canada's pre-eminent difficult mortgage specialists. His ASKROSS blog and column ​ in Canadian Mortgage Trends are focused on the intersection between mortgage financing and personal credit.

With unique dual certification as a licensed credit counselor and mortgage agent, Ross's insights are valued by mortgage professionals and homebuyers alike.

If you have questions about anything financial or mortgage-related, please contact [email protected]. Ross answers everyone personally.

​For more information, visit About Ross Taylor.