In the course of doing business, we run into, from time to time, situations that one by one seem trivial but when they happen over and over, solutions must be contemplated. Three such problems have repeated themselves to lead us to the solution required. The situations were the following:

John & Mary have worked very hard to pay off the mortgage on their residence. John has finally joined his wife in retirement. They find that their after-tax income has dwindled since retirement took place. They, at first, simply supplemented their pension income by dipping into their bank account every month. They now realize that in order to maintain lifestyles, their take home income must increase. They have thought of selling their home, but then they must face increasing rents. If they invest the sale proceeds, the interest on this money will be taxable. They tried to borrow at the Bank, only to be told that they do not meet the minimum income qualification standards.......Ideally, they need help for about five years while their health is good, and then they plan to sell everything and move into a retirement home.

Roger accepted a "golden handshake" and was able to payoff his mortgage with the proceeds. He thought he could find another job within a short period of time. One year has gone by and his savings have now dissipated. He still has not found steady employment. He tries to borrow against his house equity, only to be told that he does not meet the income qualification standards. His house is worth over $150,000 and he can't borrow on a normal mortgage because he does not have a job......Ideally, he needs a vehicle that will allow him to borrow against his equity when he needs it, and a plan that will allow him to pay back, if and when he gets a job. Without the increased pressure of having to find a job, or sell the home, employment may come easier.

Angelique has been a professional care giver at a local hospital. She loves her job but as a Registered Nursing Assistant, the pay is terrible. She wishes to go back to school to become a Registered Nurse. Her parents left her the house (free and clear) some four years ago. She mentioned her plans to her Bank manager who thinks it is a great idea, but can't get her a normal mortgage because she would be (technically and officially) unemployed. She has inquired about student loans (that don't need monthly repayments), only to be told that since her asset base is good, she will have to repay monthly if she is successful in getting the loan......Ideally, she needs a plan that will allow her to draw on every month, and capitalize the interest if she can't make a payment. In other words, she borrows a living allowance monthly, and if she can't afford to pay the interest a certain month, the interest owed is tacked onto the amount owing.

The answer to all these problems is the "Defer" mortgage. This mortgage is really a line of credit that bases the qualification standards on the value of the house, not on the income of the individual(s) borrowing the money.