Getting a Mortgage After a Consumer Proposal in Québec: Timelines, Lenders and Real Costs

A consumer proposal is a legal agreement, filed through a licensed insolvency trustee, to repay creditors part of what you owe. It protects you from collection and is often a far better outcome than bankruptcy. But it also affects your credit for years — and many people assume it rules out a mortgage. It doesn't. It changes which lenders you'll work with, what it costs and how long you'll wait. Here's how it works in Québec.

Three situations, three different paths

Buying a home during a consumer proposal

Buying while a proposal is still active is possible but limited. Alternative lenders and private lenders may approve a purchase with a substantial down payment — often 20% or more — and proof that proposal payments have been made on time. Some will require the trustee's consent or a letter confirming the proposal is in good standing. Rates and fees are higher, and terms are usually one to three years, so the mortgage is a bridge rather than a destination.

Refinancing a home you already own

If you own a home with equity, refinancing can sometimes pay off the remaining proposal balance in full, ending it early. This usually goes through an alternative or private lender, and it can make sense when the total cost of the new mortgage is lower than the time and credit impact of continuing the proposal. We model both paths — finishing the proposal on schedule versus paying it out — before you decide.

After completion: rebuilding to prime

Once the proposal is completed, ask your trustee for the certificate of full performance and keep it with your mortgage documents. Then focus on rebuilding credit:

• Open at least two credit accounts — for example, a secured credit card and a small instalment loan — and pay them on time every month.
• Keep balances low, ideally below about 30% of each limit.
• Check your Equifax and TransUnion reports to confirm the proposal is marked as completed and old debts show as included in the proposal.
• File your taxes on time and keep any government balances current.

Many lenders look for one to two years of re-established credit after completion. With that history, a steady income and normal debt ratios, bank and insured financing usually become available again. How long the proposal itself remains on your credit report depends on the bureau, which is another reason to check both reports.

What it costs

Alternative lenders price above the big banks and usually charge a lender fee. Private lenders cost more again, often interest-only, with lender and broker fees that must be disclosed in writing before you commit. Insured mortgages after a proposal, where available, follow the usual mortgage insurance rules — including a minimum credit score for at least one borrower. We present the total cost over the term, compare it with waiting a year, and show what the move back to prime would save.

Your existing mortgage during a proposal

If you already own a home, your mortgage is a secured debt and is not included in the consumer proposal — you keep making your regular payments and keep the home. At renewal, your current lender will usually offer to renew without requalifying you, which is helpful, but the offer may not be its sharpest rate and switching lenders is harder while the proposal is active. Keep every mortgage payment on time: it's one of the strongest signals of recovery a future lender will see, and it protects the equity that may later fund your exit.

Consumer proposal vs bankruptcy: how lenders see it

Lenders generally view a completed consumer proposal more favourably than a bankruptcy. In a proposal, creditors received part of what was owed under an agreement you honoured, and your assets — including your home — were not surrendered to a trustee. That track record of completed payments is exactly what lenders want to see when they assess whether a borrower has recovered. If you're still deciding between the two with a licensed insolvency trustee, ask how each option would affect your housing plans over the next few years.

Documents to prepare

• Your proposal agreement and the trustee's payment history, or the certificate of full performance once completed
• Recent credit reports from Equifax and TransUnion
• Proof of income: pay stubs and an employment letter, or notices of assessment if self-employed
• Proof of down payment held in your account for at least 90 days
• A short written explanation of what led to the proposal and what has changed since

Co-signers and joint applications

Adding a co-borrower or guarantor with strong credit and income can open more lender options, sometimes including better rates. It's a serious commitment for that person: they become responsible for the full mortgage if payments stop, and the debt appears on their own credit file. It works best within a family, with the co-signer's role and exit — for example, removal at the next renewal — agreed in writing from the start.

A realistic timeline

1. Months 0–12 of the proposal: make every payment on time; start saving the down payment.
2. During the proposal: if buying can't wait, an alternative or private lender with a larger down payment.
3. At completion: obtain the certificate; open new credit accounts.
4. One to two years after: re-apply to prime lenders, or refinance the alternative mortgage at renewal.

Mistakes that slow the recovery

• Missing proposal payments — falling three monthly payments behind can annul the proposal.
• Applying to several banks directly, which adds inquiries and declines.
• Taking on new consumer debt to furnish a new home.
• Renewing an alternative mortgage without checking whether you now qualify for a bank rate.

How we help

We work with alternative and private lenders across Québec and plan every second-chance file around the exit: the steps to rebuild credit, the checkpoints during the term and the refinance back to a prime lender. Learn more on our second-chance borrowers page or our alternative and private financing page.