Are you Self-Employed?

There are thousands of people in Canada who are self-employed or Business for Self (BFS). Most banks do not want to give these individuals a mortgage because they are usually deemed to be to high a risk. Business for Self-individuals may also have difficulty in confirming their income. They may have great cash flow but they write off so much in expenses that on paper their income may not look so great. As Independent Mortgage Agents we have access to over 50 lenders across Canada who will happily deal with the self-employed or the Business For Self individuals. Call us now and we are happy to discuss your situation and give you a recommendation. Remember there is no obligation to work with us.

If you’re self-employed or earn a commission-based salary, then you owe it to yourself ot find a top-notch mortgage planner. Why you may ask? With all the mortgage and loan options now available, it’s a great idea to shop around for the best solutions.

Choices for the self-employed:

• You can now qualify based on the income that you say you earn. This kind of mortgage is know as “stated income” because the lender takes into account the income you state, and not the income that you can prove. After all, good tax planning aims to keep that income low. The income should be reasonable, of course, and the lender may want proof of your self-employment, and may require 5% to 10% down.
• You can qualify for a mortgage on the strength of a strong credit history, rather than on your income. You will need a good credit score and proof that you have been self-employed for at least two years.
• Even with some spotty credit and no proof of income, you may qualify for a mortgage if you have some equity in your home (at least 25%). For these mortgages, qualification is based on your accumulated equity and the value of your home.
• Re-advanceable mortgages are a great way to take advantage of increasing equity. As you create equity through mortgage paydown, the line of credit portion of the mortgage is automatically increased by the same amount. This way you can access your equity when needed without having to apply, offering you more convenience and flexibility than a traditional line of credit.

It’s the job of lenders, of course, to carefully manage risk. While there is now broad recognition that self-employed Canadians are an excellent and reliable customer group, the rates and options are always best when risk is lowest. Be sure to talk to your mortgage planner about what you can provide: any documentation to prove income and/or employment, a great credit history, a significant down payment, for example. Any of these will improve your mortgage options and help you get the best rates.

Over a third of all new mortgages in Canada are now arranged through mortgage agents/brokers. If you have your own business, you probably know it makes sense to go to a specialist to get the job done. The more complex your mortgage situation, the more sense it makes to find an experienced mortgage planner who can customize a mortgage plan to meet your short-term needs and your long-term financial plan. Your home is a very important asset; make the mot of it!