The Situation
The clients, a married couple with two young children, bought a Metro Vancouver house with two rental suites at the end of 2022 while also buying a restaurant franchise. The timing left them in a private first mortgage of about $1.3 million at roughly 9%, interest only, and in early 2024 a private second of about $197,000 at over 12% on their rental house funded the business.
The Challenge
Two private mortgages cost roughly $11,900 a month and repaid nothing. The franchise had been open less than a year, one client was on leave from a part-time hospital job, and no tax return yet showed what the business was earning.
The Solution
We refinanced the home with an alternative lender under its stated-income program for restaurant owners: twelve months of business bank statements documented the franchise's revenue since opening, about $600,000, expenses were deducted conservatively to a net income of about $250,000, and one client's real-estate commissions were added, with both credit files clean at 772 and 716 and the two suites' rent of about $3,600 a month supporting the ratios. The new residential mortgage of about $1.55 million, 80% of value on a 30-year amortization and a three-year fixed term at about 5.3%, paid out the private first on the home and the private second on the rental.
The Outcome
One mortgage in place of two, payments roughly $3,300 a month lower with principal now being repaid, and the rental house carrying only its bank mortgage again. The private mortgages bought the time the business needed to prove itself; the alternative lender's program is how the family came out the other side.