The Situation
The clients, a parent and their adult child, bought a three-bedroom house in Alberta together; the parent and spouse live on the main floor and the adult child downstairs. Finishing the basement and the kitchen was paid for with high-interest secured and unsecured credit, and on two steady but fixed incomes, a chef since 2015 at about $61,000 and an office manager since 2019 at about $51,000, the payments outgrew the household. The parent's spouse was in school full time, finishing a business degree.
The Challenge
Sixteen accounts, lines of credit, a car loan, student loans, cards and finance-company loans, totalling about $182,000, and monthly payments of about $9,900 against household income of about $9,300. The credit scores had fallen to 539 and 523. The first mortgage, about $311,000, was not the problem and did not need to be touched.
The Solution
In 2024 we placed a private second mortgage of about $195,500 behind the first, on a one-year closed term at about 13% with a 35-year amortization, bringing the total borrowing to 75% of the home's value of about $675,000. Every one of the sixteen debts was paid from the proceeds, leaving two payments a month: about $2,190 on the first mortgage and about $2,140 on the second. We agreed a budget with the clients and a date: once the spouse graduates and starts contributing, in about a year, the two mortgages move together to an alternative lender.
The Outcome
Payments down from about $9,900 to about $4,330 a month, roughly $5,600 of breathing room, on two incomes with long tenure, and a year to let the credit files recover. The private second mortgage is not the finish line here; it is the step that makes the alternative-lender refinance possible.