Challenges
Needing a New Home While Protecting Business Cash
Sarah Jones is a business owner in North Vancouver with two companies and two children. She needed to move because the home she was renting was being redeveloped, and she found a new townhome for $935,000 that was an excellent deal.
She was prepared to withdraw $1,000,000 from her business to buy the property in cash, but she also wanted to keep a large portion of that money available to invest in another business opportunity.
Low Personal Income and Upcoming Costs
Even though her companies were profitable, Sarah only paid herself $60,000 per year personally and kept most profits inside the corporations, saving about $300,000 per year in retained earnings.
On paper, this meant her personal income looked low for traditional mortgage qualification.
At the same time, she needed to:
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Use as little cash as possible for the home
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Plan for a $200,000 special assessment on the property
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Set aside funds for upcoming tax payments
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Keep capital available for a new business investment
This created a balancing act between qualifying for a mortgage, keeping taxes efficient, and not draining her business cash.
Solutions
Cash Purchase First, Then Strategic Refinance
After reviewing her situation, we decided the best path was to:
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Buy the home in cash to avoid delays or financing issues that could put the deal at risk.
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Refinance the property afterward to pull money back out in a tax-efficient way.
This approach allowed Sarah to secure the property quickly while still planning to re-access a large portion of her funds for investing and upcoming expenses.
Because the funds she was borrowing were being used to invest in a business, the refinance could be structured so that the mortgage interest was tax deductible, creating an additional long-term benefit.
Digging Into the Business Financials
To get the mortgage approved after the cash purchase, we:
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Carefully reviewed both companies’ financial statements to understand how they actually made money.
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Traced the movement of money between her businesses to clearly show the true strength of her income.
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Packaged her file in a way lenders could understand, even though most of the profit was retained in the corporations rather than paid out as salary.
We identified two lenders with special underwriting programs for business owners that could work with her structure and retained earnings.
Comparing HELOC vs. Mortgage Options
Once the refinance file was submitted, we tested two main options:
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Lender 1: Approved a HELOC for $340,000 at 7.95%
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Lender 2: Approved a $600,000 traditional mortgage at 5.79%
Sarah chose the $600,000 mortgage because:
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The interest rate was significantly lower than the HELOC option
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She did not need ongoing HELOC-style flexibility
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Her goal was to fund a long-term business investment, not short-term cash flow
Results
Smooth Refinance and Restored Liquidity
Sarah’s refinance funded smoothly.
She secured a $600,000 mortgage at 5.79%, replenishing a large portion of the cash she used to purchase the home outright.
The proceeds from the refinance allowed her to:
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Invest in another business opportunity
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Cover the upcoming $200,000 special assessment
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Plan for her tax payments without straining her business cash flow
A Flexible, Tax-Efficient Structure for a Business Owner
By structuring the purchase as cash up front and then refinancing, Sarah:
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Locked in an excellent purchase price on the $935,000 townhome
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Restored liquidity to her business and personal plans
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Set up her borrowing so that, because the funds were used for business investment, the interest could be tax deductible
Overall, she ended up with a home she loved, a strong long-term mortgage structure, and ongoing flexibility to grow her businesses.
