Rebuilding after a consumer proposal or bankruptcy takes time, and most banks will not lend again until you are several years past the event. That leaves many homeowners stuck: they have started repairing their credit, they own a home with equity, and they still cannot get a conventional mortgage or renewal.
A mortgage after bankruptcy or a proposal is possible with a private or alternative lender, usually as a transition. This page explains how that works and what to plan for.
Why banks pause lending after an insolvency
A bankruptcy or consumer proposal stays on your credit report for years, and bank underwriting systems are built to decline files with recent insolvency. That is true even when your income is now stable and your payments are current. It is a policy wall rather than a judgement on you personally.
How private lenders assess these files
We start with the property: its value, what is owed against it and how much equity remains. Then we look at where you are now rather than where you were. Steady income, on-time payments since the event, a completed or well-performing proposal and a clear reason for the loan all help. Pricing and maximum loan-to-value reflect the added risk, so expect a more conservative structure than a file with clean credit.
What lenders like to see
- A discharge certificate or a proposal that is completed or in good standing
- Consistent payment behaviour since the event
- Meaningful equity in the property
- Stable income, even if it is not perfectly documented
- A plan for how you will exit the private mortgage
Check with your trustee first
If you are still in a consumer proposal, the terms of your proposal may limit new borrowing or require consent. Speak with your licensed insolvency trustee before taking on any new mortgage. We can work alongside your trustee so the financing fits the plan you are already following.
Building the path back to a bank
Treat a private mortgage as a bridge with a schedule. Keep every payment on time, keep balances low and keep documentation of your income organized. When you reach the point where a bank or credit union will consider you again, we help you refinance out of the private mortgage. Estimate your numbers with the Private Mortgage Payment Calculator.
Related pages: Bruised Credit Mortgage, Declined by a Bank or A Lender and Unusual or Non-Traditional Income.
Frequently asked questions
How long after bankruptcy or a proposal can I get a mortgage?+
Banks often require several years and a rebuilt credit history. Private lenders can consider a file sooner because they lean on the equity in the property, though terms are more conservative than for a borrower with clean credit.
Can I get financing while I am still in a consumer proposal?+
Sometimes, but your proposal terms may restrict new debt or require consent. Speak with your licensed insolvency trustee first. We can coordinate with your trustee so any financing fits your plan.
Will the rate be higher because of my history?+
Usually, yes. A prior insolvency raises the perceived risk, which can affect the rate, the fees and the maximum loan-to-value. The exit plan back to a bank is what keeps the total cost reasonable.
Will a private mortgage rebuild my credit?+
Credit-reporting practices vary by lender, so do not assume it will. Ask whether payments are reported. Rebuilding usually comes from on-time payments on reported accounts and low balances.
What documents will I need?+
Typically ID, proof of ownership and property details, your current mortgage statement, and documentation of your insolvency status such as a discharge certificate or proposal confirmation. Income information helps but is not always the deciding factor.
NOW Mortgage is a RECA-licensed brokerage operating under Dependable Mortgage Solutions Corp. Call 587-200-6727 or email lending@nowmtg.ca. Information on this page is general in nature and is not a commitment to lend. Financing is subject to lender approval, property assessment and final documentation. OAC.