A Home Worth Over $3M, a Nearly $2M Private Mortgage Due: Why Was a Bank Switch Still Difficult?

A client owned a home worth more than CAD $3 million with a first-position private mortgage of nearly $2 million. As the loan approached maturity, the existing lender proposed relatively high renewal fees. The client did not want to renew on those terms and hoped to move the mortgage to a major bank instead.

The difficulty was that the client had very little reported personal income.

The property was worth more than $3 million, and the loan did not exceed 80% of its value. But major banks do not assess a mortgage based on property value alone. A loan of nearly $2 million requires substantial qualifying income. On the client’s reported income alone, passing a bank’s mortgage review would have been difficult. He wanted to avoid the private lender’s high renewal fees but faced a barrier to switching.

After reviewing the situation, Guaranti Group reassessed the client’s financing options. Since his income alone could not support the loan, the team focused on the application structure and proposed adding a guarantor. With a guarantor who met the bank’s requirements, the lender could recalculate debt-servicing capacity using the guarantor’s income and liabilities as part of its assessment.

Ultimately, the nearly CAD $2 million first-position private mortgage was switched in full to one of Canada’s Big Five banks at an interest rate of approximately 4%. The client completed the switch without accepting the original private lender’s high renewal fees.

In this case, property value was not the main obstacle; income qualification was. For a borrower with a high-value property but insufficient reported personal income, the possibility of moving to a major bank can depend on finding an application structure that meets that bank’s requirements.