The Situation
Six months after completing a one-bedroom presale condo in Alberta in 2024 on an open private mortgage at just under 10%, the clients, a married couple in Ontario, had the tenant paying about $1,775 a month, an appraisal at about $325,000 against a purchase price of about $302,000, and credit scores that had climbed from 635 and 558 to 688 and 659.
The Challenge
The private mortgage was always meant to be a bridge, and its cost, roughly $1,900 a month in interest on about $226,000, was eating the rent. The exit written into the original file depended on two things: a payment history on the rental, and scores back above the alternative lenders' floor. Both had arrived.
The Solution
We refinanced the condo with an alternative lender under its stated-income rental program, with no lender fee: one client's nursing business documented through twelve months of bank statements, the other's salary, and the lease. The new mortgage of about $241,500, 80% of the appraised value on a two-year fixed term at about 6.2% in 2025, with a 30-year amortization, paid out the private lender, and the ratios sat at roughly 10% gross and 35% total.
The Outcome
The rate fell from just under 10% to about 6.2%, the payment dropped to about $1,470 a month against rent of $1,775, and the private mortgage was gone in six months, on the schedule set the day it was placed. A private mortgage with a written exit is a tool; one without an exit is a trap.