Here are the Coles notes on what you need to know for those in consumer proposal. Remember, every situation is unique, so always have an experienced Mortgage Broker work with you. A mortgage broker can explain to you how the mortgage and credit world work and help you create a plan of action:
- You can refinance your home when in a consumer proposal and pay it out. You need more than 20% equity to do this. The sooner you pay it off, the faster it comes off you credit bureau.
- If you are going with an INSURED mortgage (ie. 5-20% down) then you must be discharged from consumer proposal for two years and your credit has to be re0established.
- Most lenders want the consumer proposal paid in full prior to mortgage approval. Very few will look at your deal while in proposal.
- Area dependent – small rural communities are harder to get approvals.
- We can use a bundled product strategy with a 1st mortgage to 80% LTV and 2nd mortgage to 90% to get approval. Expensive, but works for many clients.
- You want to plan to have some savings that are more than just your down payment if you are buying. Don’t be house rich and cash poor.
- Sometimes we can use secondary credit like your car insurance, cell phone, or your rental payments to a landlord. If we can prove good repayment for the last couple years, we should be able to take it to a bank.
- Also, you really need to ensure that, at the three year mark after you are done, that your consumer proposal is removed from credit bureau. I have seen someone refinance 2 years into their 5 year proposal and pay it out and forget to remove it from the bureau a year later, so it keeps hurting your credit score and years of damage for no reason.
How long does a consumer proposal stay on a credit report?
Once you enter into a consumer proposal, it will start reporting on both Equifax and TransUnion credit reports within 30 days. Depending on your consumer proposal agreement with creditors, you will be making payments in a consumer proposal generally between three to five years.
Consumer Proposal will stay on your credit report for 3 years from the date you are discharged (made your last payment) regardless if you are looking at your Equifax or TransUnion report.
Original Article
https://dominionlending.ca/news/how-to-qualify-for-a-mortgage-post-consumer-proposal/
