The Situation
The clients, a married couple in Alberta, own a five-bedroom house worth about $500,000. A business one of them tried to start before 2017 failed and left large debts, which they had been paying down for six years on two steady incomes, about $158,000 as a senior trainer with a consulting firm and about $41,000 in a school district. By 2023 they still carried secured and unsecured debt, CRA back taxes, property tax arrears and a bank variable-rate mortgage that had been repricing upward all year.
The Challenge
CRA arrears and unpaid property tax are the two items a bank will not refinance around, and a credit score of 658 on the side of the file that carried the business debt did not help. Every dollar owed had to be paid from the proceeds, in full, at closing.
The Solution
In 2023 we refinanced with an alternative lender under its employed-income program: a new mortgage of about $400,000, 80% of value on a two-year fixed term at about 6.2% with a 30-year amortization, qualified on the two salaries at a 21% debt-service ratio. The proceeds paid out the variable mortgage, every secured and unsecured debt, the CRA balance and the property tax arrears, with the lender's solicitor confirming each payout.
The Outcome
Tax debt gone, cards gone, a fixed payment in place of a variable one, and two years to let the credit recover before a bank renewal. A failed business is paid for once; it should not keep a household at variable rates and in arrears for the rest of the decade.