Yes. If you own a home in Alberta and have enough equity, you can often refinance or take a second mortgage to pay off a consumer proposal early. The lender advances the money, your lawyer pays your trustee, and the proposal is marked as completed. It costs interest and fees, so it makes the most sense when you have years of payments left or your mortgage renewal is at risk.
This guide walks through how it works, what it costs with real numbers, and when it’s better to just finish your proposal.
How common are consumer proposals in Alberta?
Very common. In the second quarter of 2026, Albertans made 4,932 consumer insolvency filings, up 1.4% from a year earlier. 83.8% of those filings were consumer proposals rather than bankruptcies. Edmonton had 1,553 filings and Calgary had 1,413 (Mortgage Professional Alberta, citing the Office of the Superintendent of Bankruptcy and Equifax Canada).
Alberta also had the highest rate of 90-day-plus late payments on non-mortgage debt of any province: 2.45%, against 1.76% for Canada (same source). Many of the people behind these numbers own homes, and that equity can open options.
Can I pay off my consumer proposal early?
Yes. A consumer proposal can run for up to five years, but you can usually pay the remaining balance at any time and finish early. Trustees see this often: one MNP client in Calgary described refinancing their mortgage to pay off a proposal instead of waiting the full five years (MNP).
Your Licensed Insolvency Trustee, the person who manages your proposal, can tell you exactly how much is left to pay. There’s no penalty for paying a proposal out early (Credit Canada).
How does a refinance pay off a proposal?
- You ask your trustee for a payout statement.
- A mortgage broker compares lenders that work with people in a proposal. Many are private or alternative lenders who look mainly at your home’s equity.
- The lender approves the loan. Approval answers typically come back in 12–24 hours.
- At closing, your lawyer usually pays the trustee directly from the new mortgage, using the trustee’s payout figure.
- The trustee completes your proposal, and you start rebuilding your credit.
Most lenders lend up to 80% of your home’s value on a refinance, minus what you already owe on the home. That’s the most you’ll usually be able to use.
What does it cost? A simple example
Example only. Say you have about $45,000 left on your proposal and two small debts, and enough equity in your home.
- Today
- 3 payments, $1,000/mo
- After
- 1 payment, about $500/mo
- Back in your pocket
- $500/mo ($6,000/yr)
- Your proposal
- Paid in full
The new payment covers interest only, so the loan itself is still owed when the 12-month term ends. The plan is usually to renew, or to move to a bank mortgage once your credit has recovered.
Example only: a $50,000 private second mortgage at 11.99%, interest-only, for a 12-month term. Lender fee $1,000 and brokerage fee $750 are deducted from the advance; legal and appraisal are extra. Payment $499.58 a month. Total cost of borrowing $7,745, APR 15.80%, the same terms as the representative example on our licensing and disclosures page. Subject to lender approval (O.A.C.).
Is it cheaper to finish the proposal or pay it off?
It depends on how much is left, how long you have to go, and what else is going on. Here’s how the main options compare.
| Keep paying the proposal | Pay it off with a private second mortgage | Pay it off with a bank refinance | |
|---|---|---|---|
| Who it suits | Few payments left, no renewal problem | Years of payments left, or the bank won’t renew | Strong enough credit and income to qualify with a bank |
| Interest | Usually none on the debts in the proposal | Higher rate, built for flexibility | Lower than a private second mortgage |
| Fees | Set out in your proposal | Lender fee 1%–4% plus brokerage fee 1%–2%, plus legal and appraisal | Varies by lender; disclosed in writing |
| Term | Up to five years in total | Usually 12 months, interest-only | Up to 5 years, amortized up to 30 years |
| Credit | Rebuilding starts when it’s completed | Proposal completed sooner | Proposal completed sooner |
| Risk to your home | None added | Secured on your home | Secured on your home |
In short: paying off a proposal with a mortgage almost always costs more in interest than finishing it. People do it anyway to save a mortgage renewal, to finish years sooner and start rebuilding, or to roll other debts into the same plan.
When is this a bad idea?
- You’re nearly done. If only a few payments are left, finishing is usually cheaper.
- The new payment would strain your budget. Your home secures the loan. Missed payments put it at risk.
- There’s no plan for the end of the term. A 12-month private mortgage must be renewed or refinanced, and renewing at private rates year after year gets expensive.
- Your equity is thin. Borrowing close to your home’s full value leaves no cushion.
- The habits that led to the proposal haven’t changed. New debt on top of a bigger mortgage is a harder hole to climb out of.
If any of these sound like you, finishing your proposal on schedule may be the smarter path.
Questions people ask
Can I get a mortgage while I’m in a consumer proposal?
Often, yes, usually from a private or alternative lender, and usually as part of paying the proposal out. Most banks prefer to wait until it’s completed.
Will my bank renew my mortgage if I’m in a consumer proposal?
Some will and some won’t. If yours won’t, other lenders may. A broker can compare several at once.
How long after a consumer proposal can I get a bank mortgage?
It depends on the lender and how you’ve rebuilt your credit. Many banks look for about two years after your proposal is completed, plus rebuilt credit, and some alternative lenders may consider you sooner (Hoyes, Michalos & Associates).
Does my trustee need to approve the payoff?
Your trustee gives you the payout amount. Once it’s paid, they issue a Certificate of Full Performance confirming the proposal is complete (Bankruptcy and Insolvency Act, s. 66.38).
Can I include other debts in the same mortgage?
Usually, yes, if your equity allows. Many people pay off a car loan or tax owing at the same time.
What to do next
Start with the numbers. Ask your trustee for your payout amount, then get a free, no-obligation review. Learn more on our consumer proposal refinance page, or estimate your equity with the home equity calculator.