The Situation
The clients, a married couple in Metro Vancouver with two young children, run a licensed daycare from the lower level of their six-bedroom home, worth about $1.45 million. Their alternative-lender mortgage of about $657,000 was maturing within weeks with a renewal offer that was not competitive, they carried about $100,000 of car loans, personal loans, cards and collections plus a CRA balance of about $9,500, and only one of them was on title.
The Challenge
The debt had grown while one client changed careers after years as an owner-operator truck driver whose rig kept breaking down; the new job in a different field paid about $35,000 to $40,000. The credit files were thick but delinquent, with scores of 647 and 587 and small collections, and the daycare's income is a sole proprietor's, with no T4 to show.
The Solution
We moved the mortgage to a different alternative lender rather than accept the renewal: its program read the daycare's twelve months of bank statements, about $204,000 of deposits with 9% deducted for expenses, plus the new salary at the lower end of its range. The new mortgage of about $795,000, 55% of value on a one-year fixed term at about 6.7% in 2024, with a 35-year amortization, paid out the maturing lender, every loan, card and collection and the CRA balance, and added the second client to title and the mortgage; the ratios sat at 34%.
The Outcome
A competitive rate in place of a renewal offer that was not, all debt folded into one payment at 55% loan-to-value, both spouses on title, and a year to rebuild the credit before the next renewal, which the daycare's steady income will carry. A maturing alternative mortgage is a chance to re-price, not an obligation to accept what the lender sends.