1. Executive Summary
An Aurora client owned two properties and planned to sell both of them to buy a bigger home. Her income supported the planned mortgage on the bigger home on a standalone basis, so the final mortgage was not the issue. The issue was liquidity. She liked a preconstruction home but did not have enough liquid cash available to pay the builder deposit. We arranged a private mortgage with a blanket charge over both existing properties to cover the deposit. The exit was very clear: when the preconstruction home approached closing, she would sell both properties and use the sale proceeds to repay the private mortgage and complete the purchase.
2. Borrower Profile
The borrower was an Aurora client who owned two existing properties and intended to purchase a larger preconstruction home. Her income was sufficient to support the eventual mortgage on the larger home. The issue was access to liquid cash for the builder deposit. Borrower identity, occupation, income amount, credit score, property values, deposit amount, and lender name are not disclosed.
3. Property Profile
The financing was secured against two existing properties owned by the client. The new purchase was a larger preconstruction home. A private blanket mortgage was arranged against both existing properties to access equity for the builder deposit. Exact addresses, property values, mortgage balances, loan amount, loan-to-value, builder name, deposit amount, rate, fees, and lender name are not disclosed.
4. The Challenge
The client was not weak from an income standpoint. Her future mortgage on the larger home was supportable. The real issue was timing and liquidity. Builder deposits for preconstruction purchases can be required long before the buyer sells existing properties. The client had equity, but the equity was trapped in two properties. The file required short-term financing that could unlock equity without pretending the private mortgage was a long-term solution.
5. Why Conventional Solutions Failed
This was not a standard income-qualification problem. The client could support the future mortgage on the larger home. The problem was that the builder deposit was due before the client had sold the two existing properties. A normal mortgage on the future home would not solve the immediate deposit timing issue, and waiting to sell first could have caused the client to lose the preconstruction opportunity. The file needed short-term liquidity against existing equity.
6. Our Analysis
Our analysis focused on timing, equity, and exit. The client had a clear plan: buy the preconstruction home, then sell both existing properties before the final closing. Because the exit was tied to sale proceeds, a private mortgage could be suitable as a short-term bridge. We structured the mortgage with a blanket charge over both properties so the lender had sufficient collateral and the client received enough funds for the builder deposit.
7. Financing Structure
The file was structured as a private blanket mortgage secured against both existing properties. The proceeds were used for the preconstruction builder deposit. The planned exit was repayment from the sale of both existing properties before or at the closing of the larger preconstruction home. Public details do not disclose the lender name, mortgage amount, rate, term, fees, property values, existing mortgage balances, deposit amount, or combined loan-to-value.
8. Why the Solution Worked
The solution worked because the financing matched the real problem. The client did not need a long-term private mortgage to qualify for the future home. She needed temporary liquidity to secure the builder deposit while her equity was still tied up in two properties. A blanket private mortgage unlocked that equity, and the exit was credible because the properties were planned to be sold when the preconstruction closing approached. The underwriting principle is that private mortgages are strongest when the use of funds and repayment source are clear.
9. Key Lessons
- A borrower can qualify for the future mortgage but still need short-term deposit financing.
- Preconstruction deposits can create liquidity problems before sale proceeds are available.
- A private mortgage may be suitable when the exit is clear and tied to planned property sales.
- A blanket mortgage can unlock equity across more than one property.
- The use of funds should be specific, such as a builder deposit, rather than vague cash-out.
- The exit strategy should be documented before arranging private financing.
- Private lending is more defensible when it solves a timing problem rather than becoming permanent debt.
10. Related HopeWell Resources
Related Guide
Related Service
Related Calculator
Related Mortgage Dictionary Terms
Suggested Diagrams
- Preconstruction deposit funding timeline showing deposit due date, existing properties, blanket private mortgage, preconstruction closing, sale of both properties, and mortgage payout
- Blanket mortgage structure diagram showing property one, property two, private lender charge, deposit funds, and sale-based exit
- Buying before selling decision tree showing income supports future mortgage, cash deposit shortfall, equity trapped in properties, private bridge, and sale proceeds repayment
- Exit strategy diagram showing builder deposit funded now, two properties listed later, sale proceeds received, private mortgage discharged, and larger home completed