The Situation
The client, a physician, had run a family medical clinic since 2019 and opened a second, aesthetic clinic three years later with a business loan of roughly $340,000. Both clinics did well, about $800,000 and $580,000 a year through the business accounts. The loan's payments, close to $10,000 a month, did not fit the cash flow of a clinic still ramping up, and the lender obtained a judgement. The couple's townhome in Metro Vancouver, worth about $1.25 million, carried a bank mortgage of roughly $645,000 that happened to be fully open.
The Challenge
A judgement on the bureau is a decline at most banks before anyone reads the income. The physician's credit score had slipped into the 650s. The income lived in two corporations, so personal tax returns did not reflect what the clinics actually produced. And the couple wanted the home to end up in the partner's name, with the physician as guarantor, which a conventional refinance does not readily do.
The Solution
We placed the residential mortgage with an alternative lender under its stated-income program, which reads twelve months of business bank statements instead of tax returns: gross deposits for each clinic, less a standard 60% allowance for expenses, gave a net income the lender could use, well above the T4s. The new first mortgage of about $1,000,000, 80% of value on a 30-year amortization, paid out the open bank mortgage with no penalty and the judgement in full. The partner, a clinic manager with a clean credit score in the 740s, became the borrower and owner; the physician signed as guarantor. Total debt service came in near 50%, inside the lender's limit for the program.
The Outcome
The judgement is paid and off the file, and paying it out right away rather than letting it run saved the client many thousands of dollars in interest and enforcement costs. The clinics keep operating without a $10,000 monthly drain, and the home sits on one mortgage at an alternative lender's pricing rather than a private lender's. From here the path back to a bank is a matter of time and clean payments, which is what the structure was built to allow.