The Situation
The clients, a married couple on Vancouver Island with two children, are both professional scientists. A few years earlier their employer lost key contracts and both lost their jobs at once, while one of them was studying full time for an MBA; the household ran on savings and credit, and large school debts piled on top. By early 2024 one client had a full-time position back in the field at about $98,000 a year, and the other, with roughly 40 years in the profession and pension income, was still looking. Their custom home was worth about $2 million and carried a first mortgage of about $1.12 million with an alternative lender, plus a suite rented at about $1,650 a month.
The Challenge
Delinquencies on the credit files had pushed the scores to 556 and 620, the first mortgage's payment was about $8,100 a month, and the debts built up through the jobless stretch had to be cleared before the credit could recover. A second mortgage was the only instrument that could do it without breaking the first, but a second mortgage carried on one professional salary, with the other income still to arrive, is a payment risk a lender has to see covered. Five lenders received the file.
The Solution
We placed a private second mortgage of about $360,000, bringing the total borrowing to roughly 71% of the home's value, on a one-year closed term at about 13%, structured with a twelve-month interest reserve: a year of payments held back from the proceeds so the second mortgage pays itself while the second income is found, and the household is never late on it. The rest of the proceeds cleared the secured and unsecured debt and the delinquent accounts. The exit was agreed in writing before funding: within the year, either the second professional income arrives, with board and contract work in a 40-year career the obvious route, and the two mortgages are refinanced together, or the house is sold into a market that was recovering.
The Outcome
Debts and delinquencies cleared, a year of second-mortgage payments funded in advance, and a credit file given twelve clean months to rebuild with the family still in the house. An interest reserve means borrowing more up front; what it buys is time without a missed payment, which for two professionals between positions is the difference between a bruised-credit rescue and a forced sale.