The Situation
The clients, a married couple on a 2.8-acre property in Alberta, owed about $144,000 in unsecured debt, including a $90,000 consumer proposal, after one client's four years of self-employment as an electrician ran short of work. The home was worth about $590,000, with a first mortgage of about $243,000 at 1.79%.
The Challenge
Breaking a 1.79% first mortgage to consolidate would have cost the cheapest money the family will ever borrow, plus a penalty. The credit files, 601 and 536 with late and written-off accounts and an active proposal, closed the door to banks and alternative lenders alike. The one change that mattered had just happened: a full-time job with a large electrical contractor working on projects across Canada.
The Solution
We placed a private second mortgage of about $160,000 behind the untouched first, bringing total borrowing to roughly 68% of the home's value, on a one-year closed term. The proceeds paid off the consumer proposal in full and every other unsecured debt, turning the high payments into one. The exit is the first mortgage's own maturity: with a year of employment history, a settled proposal and rebuilding credit, both mortgages refinance together with an alternative lender.
The Outcome
The proposal is paid, the written-off accounts are settled, the 1.79% mortgage stays exactly where it is, and the household has one second-mortgage payment and room to save for the first time in years. A second mortgage is how you consolidate without giving up a rate you will never see again.