Your Mortgage Renewal During a Consumer Proposal: What Really Happens

You filed a consumer proposal a year or two ago. The payments go out on time every month. Then a letter shows up from your mortgage lender saying your term ends in a few months.

That is when the worry starts. Will they renew you? Can they call the whole mortgage? A mortgage renewal during a consumer proposal is a different file from getting a new mortgage after one, and most of what you read online mixes the two up.

Here is what your lender can and can't do, why switching is harder than renewing, and what your real options look like at each stage.

First, Your Mortgage Is Not Part of the Proposal

A consumer proposal is a deal with your unsecured creditors. That usually means credit cards, unsecured loans and lines of credit, and many tax debts. It is set up and run by a Licensed Insolvency Trustee, and under federal law it has to be finished within five years.

Your mortgage is different. It is secured by your home, so it sits outside the proposal. The same goes, in most cases, for a home equity line of credit registered on your title. The law even leaves those debts out when it decides who can file: the $250,000 debt limit for a consumer proposal does not count debts secured by your principal residence.

So in plain terms, you keep paying your mortgage exactly as you did before. Two parts of the federal Bankruptcy and Insolvency Act matter here:

• The protection. A lender can't end your mortgage, change its terms, or demand the full balance early only because you filed a consumer proposal.
• The limit. That protection does not cover missed payments. If you stop paying the mortgage, the lender can still act on the property the same way it could before you filed. Our guide to how foreclosure works in Alberta explains what that process looks like.

There is a second payment to protect as well. If your proposal payments are monthly and you fall behind by three payments, the proposal is automatically cancelled. Your creditors can then come after the full debt again. Both payments matter at renewal time.

What Your Lender Can Do at a Mortgage Renewal During a Consumer Proposal

The most common outcome is simple. Your current lender sends a renewal offer, and you renew. When a mortgage has been paid on time, most lenders do not requalify you from scratch the way they did when you first bought. Many insolvency trustees say a flat refusal is uncommon when the mortgage is current.

But renewal is not automatic, and it helps to know the rules. If your mortgage is with a federally regulated lender, like a bank, the Financial Consumer Agency of Canada says the lender must send you a renewal statement at least 21 days before your term ends. It must also tell you at least 21 days before the end of the term if it won't renew. Credit unions and some other lenders fall under provincial rules, so read your own mortgage documents too.

During a proposal, you will most likely still get an offer. What can change is the kind of offer. You may get the lender's standard renewal offer rather than one they would fight for. You may have fewer term choices. That is still an offer, and it is worth reading closely before you sign.

Here is what to do with that offer:

• Start early. Look at your options about 120 days before the term ends, not the week the letter arrives. Twenty-one days is the legal minimum, not a plan.
• Think about the term length. Some people pick a shorter term so the next renewal lands after the proposal is finished and off their credit report. A shorter term has trade-offs of its own, so talk it through rather than guess.
• Read the prepayment and break terms. If you plan to pay off the proposal or move lenders later, you want to know what it costs to get out.

Our mortgage renewal service covers how we review a renewal offer against the rest of the market.

Why Switching Lenders Mid-Proposal Is Harder

A lot of people have heard you can now switch lenders at renewal without the stress test. That is true. Since November 21, 2024, federally regulated lenders no longer have to stress test an uninsured mortgage on a straight switch, meaning the same balance and the same amortization. We explain that change in our post on switching lenders at renewal with no stress test.

During a proposal, though, the stress test is not the problem. Credit is.

Your current lender is extending a relationship it already has. A new lender is making a brand new approval. It pulls your credit report and sees the proposal, with the accounts inside it usually showing an R7 rating. Many bank switch programs will not take a file with any consumer proposal on it, and some say no even after the proposal is paid. When a bank does look at it, the underwriter will want the proposal explained, even one that is finished.

So if you want or need to move during an active proposal, the move usually goes to a different lane.

Your Options at Each Stage, From Banks to Private Lenders

There is no single answer for a mortgage renewal during a consumer proposal. What makes sense depends on where the proposal is, how much equity you have, and how clean your payment history has been since you filed.

Stage 1: The proposal is active and the mortgage is current.

• Renew with your current lender. For most people this is the cleanest path. No new credit approval, no appraisal, no new legal fees.
• An alternative (B) lender. Many B-lenders will consider a consumer proposal, especially when the mortgage and proposal payments have both been on time. They look at the whole file, can go below a 600 credit score depending on everything else, and can stretch debt ratios toward roughly 50/50. Expect them to want around 20 per cent equity, a lender fee, and often a one- to three-year term meant as a bridge back to a bank. Our guide to B-lender mortgages covers how they work.
• A private lender. Private lenders care most about equity and the property. They generally want 20 to 25 per cent equity or more, charge fees, use short terms, and want a written plan for how you will move to a mainstream lender later.

Using equity to pay off the proposal early. This is the option people don't know they have. There is no penalty for paying a consumer proposal off early. If you have enough equity, a B-lender or private refinance can pay out what is left on the proposal. Once it is fully paid, the three-year credit report clock starts from that date, so the proposal can come off your report sooner. It is not free. You pay lender and legal fees and a higher cost of borrowing for a while, so compare that against the balance left on the proposal before you decide.

Stage 2: The proposal is paid in full.

When you finish a proposal, the trustee must issue a Certificate of Full Performance. People often call this being "discharged", but that word belongs to bankruptcy. Keep a copy of the certificate, because lenders ask for it.

Equifax removes a consumer proposal three years after it is paid off, or six years after it was filed, whichever comes first. TransUnion uses a similar rule. In the meantime, B-lenders tend to open up further. Banks usually look much more favourably once the proposal is gone from your report and you have rebuilt credit, which our guide to getting a mortgage after a consumer proposal walks through.

Stage 3: You are behind on the mortgage.

This is a different situation, and the proposal will not protect you. Call your lender, and call a broker, before the second missed payment, not after the demand letter. The options shrink the longer it waits.

Your Mortgage Renewal During a Consumer Proposal: A Checklist

1. Find your maturity date and mark the day 120 days before it.
2. Call your trustee and ask for the balance left, your payment record, and the expected completion date.
3. Keep every mortgage payment on time. This is the single biggest thing working for you.
4. Don't fall behind on the proposal. Three missed monthly payments cancels it.
5. Read the renewal offer closely. Check the term, the payment, and the prepayment and break terms.
6. If the lender won't renew, or the offer doesn't work, get a second opinion right away. Don't wait for the 21-day notice window.
7. Gather your paperwork: the renewal statement, a current mortgage statement, your proposal documents, a letter from the trustee confirming your payments, proof of income, and proof your property taxes are paid.

How Gold Lion Mortgages Can Help

Surinderpal Singh has been arranging mortgages since 2023, and a big part of the work is files like this one. People who did the responsible thing by filing a proposal, and now worry it will cost them their home at renewal.

We start by looking at your renewal offer, your proposal status and your equity. If your current lender's offer is the right call, we will tell you, and explain why. If it isn't, we look across banks, credit unions, alternative lenders and private lenders, and show you what each path costs and where it leads. If paying the proposal off early makes sense, we will run the numbers with you and work alongside your trustee. Many clients in similar situations have found a path that works for them. The goal is always the same: get you through this renewal and back to a mainstream lender as soon as your file allows.

Call (587) 740-0048 or visit goldlionmortgages.com/apply.

Frequently Asked Questions

Can my lender refuse to renew my mortgage during a consumer proposal?

It can, but it is not common when the mortgage has been paid on time. Filing a proposal does not let a lender cancel your mortgage or demand the full balance early. At the end of the term, renewal is still the lender's decision, and a bank must tell you at least 21 days before the term ends if it won't renew.

Is my mortgage included in my consumer proposal?

No. A consumer proposal deals with unsecured debts like credit cards and unsecured loans. Your mortgage is secured by your home, so you keep making the same payments. If you stop paying, the lender can still take action against the property.

Can I switch mortgage lenders while I'm in a consumer proposal?

Sometimes, but it is harder than renewing. A new lender pulls your credit and sees the proposal, and many bank switch programs won't approve it. A switch during an active proposal usually goes to an alternative lender or a private lender, and your equity matters a lot.

Can I use my home equity to pay off a consumer proposal early?

Often, if you have enough equity. There is no penalty for paying a proposal off early, and an alternative or private lender may refinance to pay out the balance. The credit report clock then runs from the completion date. Compare the refinance fees and costs against what is left on the proposal first.

How long does a consumer proposal stay on my credit report?

Equifax removes a consumer proposal three years after it is paid in full, or six years after it was filed, whichever comes first. TransUnion uses a similar rule. Paying the proposal off early can bring that date forward.

Published: September 14, 2026. Mortgage guidelines, lender programs, and qualifying requirements change. Contact Gold Lion Mortgages to confirm current requirements for your file.

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