The client
A dual-income couple buying an older character home in Williams Lake. The home inspection flagged active knob-and-tube wiring throughout much of the house — a defect no A-lender on the broker’s shelf would fund against, insured or not.
Borrowers
Dual-income couple, salaried
Combined income $9,833/month
Property
$340,000 character home, Williams Lake
Property tax $260/mo; heat estimate $150/mo
The defect
Active knob-and-tube wiring throughout
Flagged at the home inspection; no A-lender would fund it as-is
Purchase financing
Private bridge loan, $238,000 (70% LTV)
9.49% interest-only
Remediation
Full rewire by a licensed electrician
$6,000 balance outstanding at the take-out
Other debt
One auto loan at $300/mo
Current
The problem
Privately funded mortgages remain a small but persistent slice of the Canadian lending market by lender type, and files like this are exactly why: a title or condition defect that no A-lender’s overlay accepts, on a property and borrower who otherwise qualify without difficulty.
The loan was structured from day one as bridge financing — sized to be repaid in full once conventional financing became available, not a long-term hold. The private lender priced to the risk of the wiring, not to the borrowers’ income or credit, which is precisely why the LTV sat at 70% rather than the 80% a conventional lender might otherwise offer.
The numbers
The bridge carried the file for five months while the rewiring was completed and inspected.
| The bridge, and what it actually cost | Amount |
|---|---|
| Private bridge loan (70% LTV) | $238,000 |
| Monthly cost at 9.49% interest-only | $1,882 |
| Interest paid over the 5-month bridge | $9,410 |
Interest was paid monthly from income, not added to the balance — the $238,000 owed on day one is the same $238,000 owed at the take-out.
| Building the take-out mortgage | Amount |
|---|---|
| Bridge principal | $238,000 |
| Remaining rewiring cost rolled into the take-out | $6,000 |
| Private lender’s discharge and administration fee | $750 |
| New mortgage | $244,750 |
| Loan-to-value on the $355,000 post-remediation appraisal | 68.9% |
Private mortgage costs generally fall into three buckets — the rate, the lender or broker fees, and any discharge or renewal charge — and the $750 discharge fee here sits squarely in the third.
Qualifying the conventional take-out
| Rate & payments | Figure |
|---|---|
| Contract rate — 5-year fixed (illustrative, not a quote) | 5.29% |
| Minimum qualifying rate — greater of contract + 2% and 5.25% | 7.29% |
| Monthly payment at the qualifying rate | $1,758 |
| Monthly payment at the contract rate | $1,464 |
| GDS / TDS | Monthly |
|---|---|
| Payment at the qualifying rate | $1,758 |
| Property tax | $260 |
| Heat | $150 |
| GDS: $2,168 ÷ $9,833 → 22.0% | ✓ |
| Auto loan | $300 |
| TDS: $2,468 ÷ $9,833 → 25.1% | ✓ |
The solution
A BCFSA-licensed submortgage broker structured the file in two stages from the outset, so the take-out was never a question of if, only when.
At purchase: placed the private bridge with a lender comfortable funding against condition, not credit, at a conservative 70% LTV that reflected the wiring risk rather than the borrowers’.
During remediation: coordinated the electrician’s scope and timeline against the private lender’s renewal date, so the rewiring finished with room to spare before the bridge would otherwise have needed extending.
At take-out: ordered a fresh appraisal reflecting the completed rewiring and followed the file, step by step, moving a private mortgage back to an A lender.
The outcome
Funded: a conventional uninsured take-out mortgage at 68.9% LTV, 5-year fixed, 25-year amortization, with the private bridge paid out and discharged in full.
The couple’s own funds covered the remaining rewiring balance and discharge fee well ahead of closing, so no further bridging was needed between the electrician’s certificate and the take-out.
What to take from this file
- 01An insurability problem is a lending problem, not just an inspection problem. Flag active knob-and-tube wiring the moment it appears — it will decide the financing before it decides the price.
- 02Structure a private bridge to be repaid, with a real exit path. Remediation plus an updated appraisal is a plan; an open-ended private hold is not.
- 03A post-remediation appraisal often recovers value a private lender’s conservative LTV did not credit. Order it before assuming the file can only refinance at the original, discounted value.
- 04Price the bridge’s carrying cost by the month before recommending it. Interest-only feels manageable monthly; over a multi-month remediation window it adds up.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸9.49% bridge rate / 5.29% take-out contract rate — rates move daily and are lender-specific; not quotes.
- ▸the electrician's fixed-price rewiring quote — a market cost, not a regulatory figure.
- ▸5-month bridge duration — illustrative; the actual remediation-to-appraisal timeline varies by project.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.