When a retail business owner wanted to help her son invest in a dental practice, she needed access to capital—fast.
The solution?
Refinance her rental property in Surrey, BC and pull out $400,000 in equity. But with incomplete tax filings and a rental condo as collateral, getting approved for a mortgage wasn’t simple.
This case study explores how we helped her navigate those hurdles using a stated income mortgage and B-lender strategy, while avoiding the high costs of private lending.
The Challenge: Funding a Business with Low Taxable Income
Why Traditional Mortgage Approval Was Difficult
On paper, the client claimed a low taxable income which is what most A lenders and banks will use for mortgage qualification. With the low reported income she had, the banks claimed she couldn’t afford her mortgage payments. Even though she knew she had the cashflow to make it work.
This meant we had to turn to lenders that support stated income mortgages—typically B-lenders or private lenders.
Rental Property and LTV Restrictions
The property being refinanced was a rental condo, not a primary residence. That made lenders more cautious.
Some alternative and private lenders won’t go above 65–70% Loan-to-Value (LTV) for non-owner-occupied condos. We needed a lender willing to go to 75% LTV, which narrowed the options.
The Added Complexity of Gifting to a Family Business
This wasn’t a standard investment—it was a gift to help her son purchase a dental office.
Because her son would benefit from the investment, some lenders scrutinized the deal more closely. Gifted funds and joint ventures with family can create added layers of underwriting complexity.
Why Private Lending Wasn’t the Best Fit
Quick Access vs High Costs
Private lenders were an option. They could provide fast approval based on equity alone, without full income documentation.
But the terms were steep:
- Interest rates: 12–14%
- Lender fees: 3–4%
- Term: Usually 1 year, interest-only
Loan-to-Value and Rate Considerations
Even private lenders capped the LTV at 75%, so the client would still need to pay thousands in interest and fees for the same loan amount. That made the private route a last resort we would keep in our back pocket if needed.
The B-Lender Strategy: Using Bank Statements to Qualify
What B-Lenders Look for in Self-Employed Mortgages
Unlike traditional banks, B-lenders in Canada often accept bank statement mortgages for self-employed clients. This allows business owners to qualify using stated income, supported by real bank deposits rather than formal tax filings.
How Bank Deposits Supported Stated Income
To make this work, we helped the client prepare:
- 12 months of business bank statements
- Breakdown of deposits and expenses
- A clear income narrative to support the mortgage for self-employed in Canada
This gave the lender confidence that the business produced enough income to support the loan.
Improving Debt Servicing Ratios
To meet the lender’s debt servicing requirements, we identified smaller debts the client could pay off. This improved her Gross Debt Service (GDS) and Total Debt Service (TDS) ratios, helping her qualify for a larger mortgage amount.
Securing the Right Mortgage: Negotiating for Better Terms
Initial Shortfall and Conservative Lending Practices
The first lender approved just $360,000, short of the $400,000 target.
Why?
- Conservative stance on rental condos
- No primary residence
- Limited income documentation
We needed to shop the file to another B-lender willing to push to the full 75% LTV and consider a longer income history.
Final Approval with 12 Months of Statements
The second lender agreed to approve:
- $434,000 mortgage
- 7.69% 1-year fixed rate
- Using 12 months of verified bank deposits
They also required that a few outstanding debts be paid off, which improved affordability on paper and met their lending guidelines.
Appraisal Value and Final Loan Terms
An appraisal came in at $580,000, which was lower than expected—but still enough to secure the full 75% LTV refinance. The deal was finalized and funded without needing to resort to private lending.
Key Takeaways for Business Owners Using Equity
Stay Current on Taxes
Filing taxes on time is essential. Missing returns can disqualify you from traditional lending and limit your options.
Know the Trade-Offs of Private Lending
Private mortgage lenders in Canada offer speed, but at a steep cost. Use them only when timing is critical or no other options exist.
Prep Bank Statements Like a Pro
For a bank statement mortgage, your deposits and expenses need to clearly support your stated income. Work with someone who can guide you through the documentation.
Be Flexible and Strategic
Sometimes lenders won’t approve the full amount you want. A strategic approach, including lender negotiation and debt paydowns, can bridge that gap.
Work With a Mortgage Advisor Who Knows Business Lending
Business owners have unique needs. An advisor who understands mortgages for self-employed Canadians can help you unlock equity and fund growth—even with complex scenarios.
Do You Need to Access Equity for Future Business Ventures or Investments?
Refinancing a property as a business owner doesn’t seem easy—but it is possible!
I helped this client use $434,000 from her rental condo—without resorting to high-cost private lenders—to buy a dental clinic by leveraging a B-lender stated income strategy.
Here’s how I can help you too:
✅ Access capital using stated income—even with tax plans that lower your tax bill
✅ Avoid private lending rates by working with lenders who understand business owners
✅ Improve your mortgage eligibility with strategic debt positioning
Book a call to build your financing strategy today.
Let’s explore how to unlock your equity and fund your next business move—without getting stuck in the wrong loan.