The Situation
The client, single and working part time after years of holding several jobs, owns a downtown Metro Vancouver loft condo rented at about $2,650 a month and a second condo, mortgage-free, worth about $820,000. A year earlier a private open mortgage had replaced the maturing alternative-lender mortgage on the loft so it would not have to be renewed; the plan was to sell. The first listing went out about $100,000 above what other realtors advised and drew little interest, and when the price came down to about $825,000 the offers sat near $800,000, lower than the client was willing to accept.
The Challenge
The private mortgage was coming due, the client wanted to wait for the spring market rather than take a low offer, and a part-time income of about $25,000 a year qualifies for nothing at a bank or an alternative lender. The condo's building also owns the parking lot across the street, development potential a forced sale would give away.
The Solution
In late 2023 we placed a new private mortgage of about $665,000 at about 9.5%, interest only, three months closed and then fully open, secured inter alia across both condos so the combined loan-to-value sat at about 41%. The proceeds carried twelve months of payments, the legal fees and a special levy of about $5,000, so nothing falls due from the client's own pocket while the condo waits for a better market. The exit is the sale, on or before the twelve-month mark, with the option of one more year if the market needs it, and the client's own stated fallback of selling at whatever the market gives and retiring mortgage-free.
The Outcome
The private mortgage carried the condo with its payments already funded, so the client could wait for the spring market instead of taking a low offer, and the second property's equity bought the pricing the lender needed. A private open mortgage with the payments prefunded is what lets an owner choose when to sell; the only version of this that goes wrong is one without the exit written down.