Mortgages for the Self-Employed
Each year more and more Canadians become self-employed. Many are shop-owners, landscapers, or construction contractors. However, in Alberta, many are simply contractors to larger companies like large Oil or Telecommunications companies, similar to typical T4 employees. Except for how taxes are prepared it seems almost the same thing!
Something many people do not consider when making the decision to start a business is how being self-employed will affect their applications for credit, especially a mortgage application. The reason it is so difficult for self-employed individuals to finance things, such as a mortgage, is that they reduce their provable income by claiming expenses (thereby also reducing their taxable income.) Unfortunately, most banks don’t recognize this income that has been deducted, or very little of it.
We are self-employed too and understand your situation! As mortgage brokers in Calgary, we have connections to lenders and mortgage products that look at your credit history and business income instead of your personal tax assessments which allows you to declare your real income rather than using only your personal taxable income. Many buyers might worry their situation might limit their mortgage options, but in many cases you still have access to the most competitive rates! Get started with us today to get the best product for you.
Before you start
Plan it out. Talk to a Calgary Mortgage Broker! We can help you get an idea of what your financial situation looks like. How much debt do you have? What is your business growth and what are your expenses? Do you have any big changes in the works? We can help you map out your options based on your own personal circumstances.
Keep good credit. Not only is it more difficult for the self-employed to obtain a mortgage, but the new mortgage approval guidelines can make it even more difficult. The best thing you can do for yourself is keep your credit in good condition.
Keep it organized. Filing and paperwork are most often the most unenjoyable parts of owning your own business, but keeping everything organized will make a world of difference when you apply for a mortgage. Being able to access and share your information quickly not only makes things easier and speeds up the process, but instils a sense of confidence in your lender. The more you can prove you’ve got it together, the more they’ll believe you’ll KEEP it together.
Low Documentation and Low Down Payment
With the backing of Genworth Financial Canada or Canada Guaranty, several of our lenders are able to offer you flexible purchase financing with a down payment of only 10%. You do not need to prove your income for this mortgage using your personal tax returns.
We look at:
- Credit History — no bankruptcies, credit counselling or foreclosures. Minimal or no late payments, especially in the last 12 months.
- Work History — we need to see how long you have been in your line of work. Ideally, you have been self-employed for 2 years.
- At least 5% of your down payment must be from your own savings and provable. The rest can be a gift from family, but none can be borrowed.
Our best rates are available through this product.
You must be self-employed for a minimum of 6 months to use our equity mortgage program. Through an equity mortgage, we can finance up to 80% of your home. We are better able to deal with credit challenges because there is more equity to work with. Your interest rate will be determined by your credit history, but your down payment can be borrowed or a gift. You must be self employed for 6 months minimum for this program and your income will be determined using your business bank statements.
To find your best mortgage solution as a self-employed buyer contact Calgary Mortgage Brokers today!
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Current Mortgage Interest Rates
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