After a consumer proposal, mainstream lenders generally want to see it fully discharged plus a period of re-established credit before they will lend. Equity-based lenders are often willing sooner, which is why a second or private mortgage is a common bridge — sometimes used to pay out the proposal early and begin the recovery clock.
$10,000
Ontario provides a home-equity exemption in a consumer proposal (reported at $10,000 as of 2025). If your equity is at or below the exemption it is protected; above it, the extra is generally accounted for in the proposal. This is a question for your Licensed Insolvency Trustee.
Source: reported Ontario 2025 exemption. Confirm the current figure with a Licensed Insolvency Trustee.
Where you stand after a proposal
A consumer proposal remains on your credit report for a defined period after completion, and the accounts included are marked accordingly. A lenders typically want the proposal discharged and roughly two years of clean re-established credit — often two active trade lines used responsibly. B lenders are usually more flexible, and equity-based lenders more flexible again.
The important point: this is a timeline, not a permanent bar. Most people who go through it do return to mainstream lending.
Paying out a proposal early
Some homeowners with equity use a second mortgage to pay the remaining proposal balance in a lump sum. This can shorten the process, because the recovery clock generally starts from completion rather than from when payments would otherwise have finished.
Whether that’s worthwhile depends on the remaining balance, the cost of the borrowing, and how much time it actually saves. Sometimes it accelerates things meaningfully. Sometimes the fees outweigh a modest saving in months. Do the arithmetic before assuming.
Discuss any early payout with your Licensed Insolvency Trustee first. They administer the proposal and can confirm the payout figure and the implications.
Rebuilding credit deliberately
- A secured credit card, used for small purchases and paid in full monthly
- Keeping utilisation well below the limit — a low balance paid off beats a zero balance
- Two active trade lines is the common lender expectation
- Every payment on time; a single late payment sets the rebuild back materially
- Checking your report for accounts still reporting incorrectly after discharge — errors here are common and worth correcting
The realistic path back
Proposal completed and discharged, then equity-based financing if needed in the interim, then a B lender once there’s documented income and some re-established credit, then an A lender once the history is genuinely rebuilt. Each stage generally takes a term. Mapping the milestones at the start makes the difference between a planned recovery and a series of expensive renewals.
Risks to understand
- Borrowing against your home after insolvency puts secured pressure on the asset you kept
- Private financing costs more; terms are short and renewal is not guaranteed
- If the circumstances that led to the proposal haven’t changed, further borrowing can compound them
- Final approval depends on the complete application and lender review
Where the underlying financial picture is still difficult, further independent advice from your trustee is the right first step rather than more borrowing.
Documents generally needed
Proposal documentation and certificate of full performance where completed, current credit report, mortgage statement, property tax bill, proof of insurance, photo ID and income documents.
Frequently asked questions
How long after a proposal can I get a mortgage?
Equity-based lenders may consider a file while a proposal is active or shortly after discharge, subject to equity. B lenders typically want it discharged. A lenders generally want discharge plus around two years of re-established credit. Circumstances vary.
Does paying it out early remove it from my credit report?
No. It shortens the period to completion, and the reporting period generally runs from completion — so it can bring the end date forward. It does not erase the record.
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• A Licensed Insolvency Trustee — administers proposals and can confirm exemptions for your situation
• FSRA — mortgage broker regulation: fsrao.ca
This page is general education about mortgage options in Ontario. It is not legal, accounting, tax or insolvency advice, and it is not an offer of credit. Please seek independent professional advice for your own situation.