Financial implications can be hard to deal with. But a consumer proposal might help you out of them smartly. It helps you protect yourself from creditors and you can also come to a fair bargain regarding your debt payment.
Although consumer proposals are a wonderful option for availing relief in paying off your debt along with protecting your assets too. But the question here is; what impact does it have on your chances of qualifying for a mortgage? Can you get a mortgage with a consumer proposal? Let’s find out together.
What is a Consumer Proposal?
First things first, what is a consumer proposal?
This legal procedure helps you negotiate your debt payment terms with the creditor or get extra time for the repayment. This proposal aids in offering relief from financial stress and difficulties while paying off your debts. Furthermore, you get protection from creditors as well. All in all, a consumer proposal is certainly one of the best solutions for anyone who is under financial constraints and requires a little relief.
Consumer Proposal and Mortgage
A consumer proposal is a wonderful option for paying down your debt smartly, under affordable terms. This can largely reduce financial stress from you or your family but it is important to know that it does affect your credit rating.
However, it will not reduce your chances of securing a mortgage, for purchasing a new home. Furthermore, the mortgage dealer cannot make any amendments in the terms of the mortgage, due to the consumer proposal either. The dealer is only allowed to do so, in case you have missed your payments.
Therefore, if the mortgage dealer rejects your mortgage or makes changes to the policies; you must take action. The consumer proposal, in no way, can alter the terms for a mortgage.
Impact of Consumer Proposal on Credit Score:
As mentioned above, consumer proposals do leave an impact on the credit rating.
When you file for a consumer proposal, you basically tell your creditors that you cannot make the repayment at the given time. Although the proposal does not ruin your creditor; it does leave a negative impact on your credit score. This is the same effect that your credit score would go through if you do not make the payment on time.
If you file for a consumer proposal, you might get an R7 credit rating. But it is important to understand that it is much better than making no payment at all because it leads to adverse outcomes on your credit score and rating.
How to Qualify for a Mortgage after a Consumer Proposal?
As a consumer proposal is adding financial ease to your life, it is best to take it as a chance to alter your saving habits. It brings flexibility and thus, you can create a budget to start saving up wisely. If you are planning to apply for a mortgage sooner or later in life, then this will help you significantly.
A good amount of downpayment for the mortgage will boost your chances of qualifying for the mortgage. Remember, your proposal has no impact on the approval of the mortgage. However, it is important to build up your credit wisely. Pay your bills on time and try to build up your credit score before you go ahead with the mortgage.
Mortgage lenders always take a look at your credit score, to determine whether you can qualify for it or not. Thus, a good credit score can play an important role.
THE BOTTOM LINE
Financial stress comes uninvited and it is hard to deal with if you are already under debt. This is why people usually opt for consumer proposals when trying to manage their difficult times and debt together. It is certainly a smart choice to make to reduce the strain and pressure whilst adding flexibility to your repayment schedule.
In the end; does the consumer proposal leave a negative impact on your chances of qualifying for a mortgage? No. It does not.