When a condo closing reveals a much deeper debt crisis
Franchi offered the example of a one-year, interest-only second mortgage for $350,000 at a 10% rate with $44,500 in lender, broker, and legal charges deducted at advance – meaning the client receives $305,500. First-year fees and interest would total about 26% of the net cash received if they come to $79,500, he said, with the $350,000 principal still requiring repayment.
“That loan needs to accomplish something worth its cost,” Franchi said. “A hoped-for rebound is not the same as an executable exit. The broker’s question cannot stop at whether this condo closes. What funds the next 12 months across the household and every property? If the answer remains more borrowing, the conversation needs to widen beyond the next mortgage.”
The other costs of holding on
Another essential step is asking what the property was supposed to do for the household. Sometimes it might have been an investment funded from genuine surplus income; at other times, it might have been expected to produce the gain that would cover another property’s losses and finally put the family ahead. “That is a great deal to ask of one condo,” Franchi said.
“Once someone sees that gain as their way out, letting go is not just accepting an investment loss. It can feel like abandoning the solution to every other financial problem. That’s why the father takes another shift and why the family keeps finding money for a property that never seems to give any back.”
