Steve and Connie’s Success Story: How a Private Second Mortgage Helped Them Navigate COVID-19
Meet Steve and Connie
Steve and Connie have their sights set on retirement life. Their 2020 goals were to get their house ready to sell and find a new home further north of Barrie. With lots of equity in their home, and the lower purchase prices in northern communities, they were dreaming of being mortgage free, and with the lower monthly cash flow requirements, it will allow them to slow down from their current lifestyle.
In order to sell, they had identified a number of improvements they wanted to make in order to have their house sell for the “highest and best” price. In addition, they also realized they would need some additional funds to have a satisfactory deposit on the offer on the new home.
So, like many, they headed to their bank. Even with a low mortgage balance and significant equity in their home, the bank was not willing to offer them any funds due in part to some minor issues a number of years ago and the oncoming COVID threat.
Obviously, their dissatisfaction with their current bank had them looking elsewhere. As the pandemic was announced and the “state of emergency” rules came into play, they faced some challenges. Probably the biggest challenge facing all non-essential workers is the “stay at home” order. Even though banks/governments are somewhat accommodating during this time on debt payments, none of them are offering to lend to people who are technically unemployed.
On top of this challenge, an old issue popped up. About 15 years ago, a developer had purchased the land behind Steve and Connie’s property and there were problems upon registry that affected their title. Because they were with the same bank since they purchased, and just renewed at each passing maturity date, the title issue never came up, but they knew their neighbors had been dealing with it and were concerned about the cost this would mean for them. Now that we are in a provincial shut down, with no income and a land title issue, things are not looking too good.
Enter a solution: a private lender reviewed their position and, providing that the title issue is resolved, they were willing to lend. They felt that the substantial equity in the property, and the clear exit strategy of selling the property, were solid merits to proceed with the second mortgage. The mortgage amount was enough to do the upgrades, cover title change legal costs, and provide a sufficient deposit on a new purchase!
Next was probably the biggest challenge: clearing up the title issue, especially as everyone is “working from home”. Inquiring with the neighbor’s lawyer gave access to the developer’s lawyer, and when we connected with them, the lawyer said that the developer had decided just a few weeks prior to abandon their dispute, and the title could be amended and cleared. This was the best news! Within a week of this news the title issue was corrected, and the second mortgage was completed. Moral of the story: Steve and Connie are on their way to reaching their goals, and persistence pays off!
Are you in a similar situation as Steve and Connie? Give us a call to see if we can find a solution that fits your situation. Our experienced brokers are here to help you navigate the financial impacts COVID has had on you and your family.
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