Combining a first mortgage and a private second mortgage with high rates despite clients having income issues. Mr. & Mrs. had been experiencing income issues and between the two of them they found it hard to show their income. Mr. was having a hard time finding work and was showing little income on his previous years Notice of Assessments. Mrs. had been receiving permanent disability from an insurance payment due to an accident. It was easy to see how they ended up with a second mortgage with rates of 12% and interest only (meaning the payments monthly never go to the principal balance and always go to interest – so in the end you end up owing the same amount that you borrowed) Despite this they had been able to pay their mortgages every month.
During this time some of their other debts fell behind. Even after Mr. was able to find a permanent job, They inquired to both mortgage lenders and tried to consolidate the two together. Both lenders informed them that they would pay huge penalties for breaking the mortgages.
We had them go into an open mortgage for 6 months with their first mortgage so that when it came due there would be no penalty to break it. We timed this accordingly so that when their second came due we were able to combine the two mortgages into one complete first.
In the end it saved them a total of $500 per month and this mortgage does go to Principal plus interest. They are now caught up on their other bills!