The Situation
The clients, a married couple who have owned their restaurant in Metro Vancouver for about six years and grown its sales every year, own a four-bedroom townhouse worth about $1.5 million with an alternative-lender mortgage taken at the end of 2021, when rates were at their lowest. They had about $191,000 of unsecured debt across six lines of credit, cards and a finance-company loan.
The Challenge
Breaking a late-2021 mortgage in the autumn of 2022 would have meant a penalty and a new rate on the whole balance far above the old one. The debt, meanwhile, had pushed one credit score down to 590 through utilization alone, and a restaurant owner's income is stated, not salaried.
The Solution
We asked the existing alternative lender to blend rather than break: an additional $250,000 at about 6.5%, the lender's rate that autumn, was mixed with the original mortgage at its 2021 rate into a single new mortgage at 80% loan-to-value on a two-year term, so the low rate kept working on most of the balance. The file qualified on the lender's stated-income program for business owners at about $200,000, with the household's child benefit as support, and the proceeds paid out all six accounts.
The Outcome
$191,000 of debt gone, one mortgage payment instead of seven, no penalty, and a rate well below what a fresh mortgage would have carried. When the rate on the books is better than anything the market offers, the lender's own blend is the tool, and it has to be asked for.