The Situation
The clients, both pensioners, lived on Canada Pension Plan and Old Age Security plus a part-time job at a retail store, about $45,000 a year between them. Over the pandemic they had helped a son and a daughter through financial crises and had not been repaid. By early 2023 they carried fourteen cards and loans totalling about $236,000, several written off, with the city's property taxes also unpaid. Their townhouse was worth about $441,500 and had equity.
The Challenge
Credit scores of 474 and 488 close every bank and alternative lender's door before the income is read, and the income could not carry $236,000 of consumer debt at any rate. The equity was real but the file had no path to a conventional refinance, and left alone the written-off accounts would have ended in collections and, eventually, a judgment against the home.
The Solution
We placed a private first mortgage of about $265,000, 60% loan-to-value, on a one-year term, with a twelve-month interest reserve built into the loan so the payments were funded from day one. The proceeds paid out every card, loan and the tax arrears. Two accounts per person were kept open with limits cut to $2,500, so credit could rebuild without room to rebuild the debt, and the plan for the year was written down: income up slightly, the children repaying, and if needed a sale on their own timeline rather than a lender's.
The Outcome
Every debt was paid and the home was kept. A year later the clients' scores had recovered to 734 and 648, their family had repaid about $65,000, and the file moved to a major bank, the next case study. The private mortgage was the bridge that bought the year.