Consumer proposal and mortgage renewal

January 26th, 2009 by Questions

My mortgage is up for renewal in July of 2011. I have a perfect payment history and expect I always will. I was considering doing a consumer proposal (I have too much credit card debt for my income to support), and consulted with my mortgage broker first. She told me there was absolutely no way I would be approved for a renewal from her if I was still paying the consumer proposal when my renewal came up, and I would lose my house. She said if I had been discharged from a bankruptcy, however, I had a fighting chance.

Then I went to see a Licensed Insolvency Trustee, and although he said he could do a bankruptcy for me (with 21 month term due to surplus income), he saw no reason not to do a consumer proposal instead, as plenty of people renew their mortgages while paying off consumer proposals. He says my broker is wrong. I am troubled by the conflicting information. Where do I go from here?

Posted from: Ontario


One Response to “Consumer proposal and mortgage renewal”

January 27, 2009 at 11:06 am, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:

Typically speaking a mortgage renewal is much easier than a mortgage transfer. This is because the lending institution is aware of your payment history and as long as you have consistently made all your payments on time they then begin to rely more on their history with you than on your credit history.

A transfer of a mortgage may be a different story as any institution your broker approaches will have to rely entirely on your credit history. So perhaps your mortgage broker was talking about trying to shop your mortgage aroud, and if so I would suggest it would simply be easier to stay put.

While I am also a little surprised that your mortgage broker suggested it would be easier to obtain financing after a bankruptcy than a consumer proposal. A bankruptcy has a more significant impact on your credit and most institutions once they understand the difference are much easier to work with after a proposal.

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