Case Study · Residential / Prime

Business Owners on a Port Moody View Home: A $2.3 Million Major-Bank Refinance at 66% Read Salary, Dividends and an Add-Back

A married couple owns a large view home in Port Moody worth about $3.5 million. One spouse is a 50% owner of a contracting company in business for more than 26 years; the other has worked ten years in government, and together they own a holding company. With one of their mortgages coming up for renewal, they wanted to clear some unsecured debt and fund their child's education.

Closed in 2023 · Published October 17, 2026

Residential
Prime lender
Refinance
Business-owner
Incorporated
Corporate income

Home value: about $3.5 million
New mortgage: about $2.3 million
Loan-to-value: 66%
Company in business: more than 26 years
Credit scores: Two above 800

The Situation

The Challenge

Business owners' income rarely sits in one place. Here it came as salary from the operating company, dividends from the holding company and a government salary, and the operating company's financials carried a non-cash amortization expense.

The Solution

In 2023 we refinanced with a major Canadian bank: about $2.3 million, 66% of the value, on a three-year fixed term at about 5.8% with a 30-year amortization. The bank used the two-year average salary, added back the amortization from the company's interim financials, counted each spouse's holding-company dividends without grossing them up along with the government salary, and two credit scores above 800 carried debt-service ratios of about 47%.

The Outcome

The refinance replaced the existing financing at renewal, paid out the unsecured debt and funded the education plans, all at a bank rate.

Run the numbers

Equity Take-Out Calculator

This refinance at renewal paid out debt and funded an education. Net a refinance to cash in hand on your own numbers.

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Your property

Property type

Second mortgages go to 75% combined for detached homes and townhomes in Metro Vancouver, the Fraser Valley, select Okanagan, Greater Victoria and Nanaimo. Outside the footprint, maximums step down — that's placement work.

Property value

Current mortgage balance

Current monthly payment

Your existing mortgage (for the penalty estimate)

Current rate

Months left in the term26 mo

Quick estimate: variable = 3 months' interest; fixed = the larger of 3 months or fair-method IRD. Run your lender's exact method →

The new money

New first mortgage lane (Path A)

New first mortgage rate

New amortization30 yrs

Second mortgage rate (Path B)

Seconds are interest-only and price by combined LTV and story.

Locked inside your home

$550,933

The most net cash your equity can release today — after every penalty, fee and legal cost — via Path A: breaking into a new first mortgage.

Path A — break & replace

Most cash

New first mortgage (80% of value): $960,000
Pays off your current balance: − $400,000
Penalty estimate (IRD (fair) vs 5.19% 2-yr): − $6,067
Financing fees (lender-paid: $0): − $0
Legal + appraisal: − $3,000
NET CASH IN HAND: $550,933
New monthly payment: $4,425 (+$1,895 vs today)
Added monthly cost per $100K raised: $344

Path B — keep your first, add a second

Second mortgage room (to 75% combined): $500,000
No penalty — your first stays untouched: $0
Financing fees (per our fee schedule): − $15,000
Legal + appraisal: − $2,300
NET CASH IN HAND: $482,700
Monthly add (interest-only): $4,163 on top of your $2,530
Added monthly cost per $100K raised: $862

How to read this

Residential through an A lender costs no financing fees at all — the lender pays us. Commercial always carries fees (brokerage from 1%, $10,000 minimum) because commercial lenders don't pay broker compensation.
The money is tax-free. Pulling equity out is borrowing against your own asset — it's not income, so it triggers no tax. (Interest can even become deductible when the cash is invested to earn income.)
Cheapest time: renewal. Best time: when you need it. A new mortgage funding on your maturity date pays zero penalty (lockable 120 days ahead — tick the renewal box above). But urgent money — CRA about to lien, a deposit deadline, payroll — costs more to miss than any penalty, and the second-mortgage path never has one.
Break when the penalty is small or your rate is high — a new first at today's rates can raise more cash AND sometimes lower the payment, since the whole balance reprices.
Keep the first when it's a rate worth protecting or the IRD is brutal — the second costs more per dollar, but only on the new money, and your first stays exactly as it is.
Before signing any second, run it through the Mortgage APR calculator — the true all-in cost over the months you'll actually keep it.
Using the cash to kill expensive debts? The blended-rate calculator shows what your current debt pile really costs.

Penalty is an estimate (fair-method IRD / 3-month interest) — big-bank posted-rate IRD can run higher; the penalty calculator prices both methods. Fees shown are our published ranges (fee schedule) and include the minimums that apply on smaller amounts — brokerage from $2,500 residential / $10,000 commercial, private lender fees from about $2,500 residential — every real file is quoted in writing before you sign. Second-mortgage maximums shown apply in Metro Vancouver, the Fraser Valley, select Okanagan, Greater Victoria and Nanaimo. Borrowed equity is not taxable income, but leverage is real risk — the property secures every dollar. Qualification, appraisal and lender appetite decide final numbers — estimates, not commitments.

What this calculator does that most don't

Prices BOTH ways out of the equity — break-and-replace to 80% (75% commercial) vs keep-your-first-plus-a-second to 75%/65% — side by side, with a most-cash verdict
Nets to actual cash in hand: penalty estimate (reusing our penalty engine), our PUBLISHED financing fee schedule, legal and appraisal — not a gross 'you have $X of equity' headline
Knows the real second-mortgage caps by property type — 75% detached/townhome, 65% condo — for the Metro Vancouver, Fraser Valley, Okanagan, Greater Victoria and Nanaimo markets we place in
Prints the cost per $100K per month for each path — and when breaking into today's rates actually LOWERS the payment while raising cash, it says so

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Questions and answers

Questions about this file

How does a bank read a business owner's income?+

In this 2023 file a major Canadian bank used three sources: the two-year average salary from the operating company, each spouse's holding-company dividends and a government salary, with the operating company's non-cash amortization expense added back.

What is an amortization add-back?+

Amortization is a non-cash expense: it lowers a company's reported profit without money leaving the business. A lender that adds it back reads the cash the company actually produced. Here the bank took it from the company's interim financials.

Were the dividends grossed up?+

No. The bank counted each spouse's holding-company dividends without grossing them up, along with the government salary.

What were the terms?+

About $2.3 million, 66% of the home's value of about $3.5 million, on a three-year fixed term at about 5.8% in 2023 with a 30-year amortization, at debt-service ratios of about 47%.

What did the refinance pay for?+

It replaced the existing financing at renewal, paid out the unsecured debt and funded their child's education, all at a bank rate.

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