Question: Is it possible to renew or refinance a mortgage to the bank while you are in a consumer proposal, debt management plan or even bankruptcy? Would I need a co-signer for refinancing or renewal?
Mortgage Renewal and Debt Proposals
Since a consumer proposal or debt management plan can last up to 5 years, it is not unusual that your mortgage would come due for renewal during your proposal period. The good news is mortgages are almost always renewed by an existing mortgage lender, as long as you have continued to make your monthly payments in full and on time. Even in a bankruptcy, you will most likely be able renew your existing mortgage with your current lender. It may be advisable to obtain a letter from your trustee or credit counsellor stating you have not missed any payments. Your lender may also want proof that there is equity in your home or that you are able to continue to make your monthly payments.
If you are looking to refinance your mortgage with another lender, increase the amount of your mortgage, or apply for a new mortgage while in a proposal, it is much more difficult. A co-signer may help. Our article on applying for a mortgage while in a consumer proposal or similar debt settlement program provides some helpful tips if you are looking for additional mortgage financing during a debt management program.
For more details, listen to our radio show about mortgages and refinancing.
Researching the implications of filing a consumer proposal, debt management plan or bankruptcy is a good approach. If you have more questions about your home, your mortgage and how they are affected by the different debt relief options available to you, contact one of our expert, accredited debt professionals for advice.