The Situation
The client, a single parent of two who had moved from BC to Alberta about a year and a half earlier, bought a five-bedroom house, now worth about $300,000, and paid the mortgage down to about $65,000 with the proceeds of the BC sale. A couple of job changes while settling in left about $74,000 of secured and unsecured debt and a credit score of 594, before a full-time position at about $56,000 came along.
The Challenge
A score under 600 keeps a bank refinance out of reach however much equity sits in the house, and the client wanted more than a consolidation: about $30,000 to finish a basement suite that would rent and add a second income.
The Solution
In 2023 we refinanced with an alternative lender under its program for credit scores between 575 and 599: a new mortgage of about $180,000, 60% of value on a three-year fixed term at about 7%, qualified on the new salary and the child benefit at a 31% debt-service ratio. The proceeds paid out the small first mortgage, every debt and the closing costs, and left the suite money.
The Outcome
One payment, no consumer debt, the basement suite funded, and a credit file that can recover toward a bank lender at renewal. For a borrower who has done the hard part, paying the house down, a bruised score is a temporary condition, and the equity is what carries the file until it heals.