Renewing a mortgage is a common financial step for many homeowners in Alberta. However, if you’ve recently gone through a proposal, you might wonder how it will affect your ability to renew your mortgage in this province. A proposal is a formal debt relief option in Canada, and it can significantly impact your financial situation. In this blog, we will explore how a proposal can affect your mortgage renewal prospects in Alberta and discuss the various options and considerations.

Understanding Consumer Proposals

A proposal is a legal process in Canada that allows individuals to negotiate a settlement with their creditors to repay a portion of their debts over an extended period. It is an alternative to filing for bankruptcy and is often used when individuals cannot meet their financial obligations.

The Impact of a Proposal on Credit Score

One of the immediate effects of a proposal is its impact on your credit score. When you enter a proposal in Alberta, it will be noted on your credit report, which may negatively affect your credit score. However, this impact varies from person to person and depends on your credit history before the proposal.

Renewing Your Mortgage in Alberta After a Consumer Proposal

When it comes to renewing your mortgage in Alberta after a proposal, you can consider the following options:

  • Renewing with Your Current Lender: Renewing with your current lender is an option for those who have maintained good standing with their mortgage payments during the proposal. While the interest rates offered in this scenario might be less competitive, it is usually the best option for renewal. Many lenders in Alberta have automated processes for offering renewals to clients in good standing, which allows you to keep your house, even though it may not have the best interest rate offerings.
  • Switching to a New Lender: If you shop around, you may find a new lender in Alberta willing to offer you a new mortgage. However, this may include higher interest rates due to your credit history. This can be an option if your current lender is not accommodating.

Considerations for Mortgage Renewal After a Proposal

Paying off a mortgage in full is generally not an option if you already have an ongoing proposal. This is because proposals are typically entered into when individuals are unable to meet their financial obligations, and clearing an entire mortgage debt during this time may not be feasible.

During and after a proposal, it is vital to maintain a good track record of making your mortgage payments consistently and on time. This signals to the bank that you are reliable, even though you may have filed a proposal in the past. Missing mortgage payments during and after the proposal could raise concerns that may then affect your ability to secure a mortgage renewal.

Renewing your mortgage in Alberta after a proposal is possible, especially if you have maintained good standing with your mortgage payments during and after the proposal. While interest rates may not be the most competitive, it is often the best option to allow you to keep your home. Remember that being proactive about rebuilding your credit and seeking professional advice can help you navigate the mortgage renewal process successfully. Demonstrating financial responsibility and reliability allows you to maintain your homeownership and financial stability in Alberta even after a proposal.

If the concern of being able to renew your mortgage has prevented you from getting help with your debt, we encourage you to contact us today for a free consultation. We will be more than happy to review your situation and talk about your financial options.