Self-Employed Mortgage Tips
According to Statistics Canada, just over 2.7 million Canadians declared themselves as self-employed in 2016.
As a large, growing section of the population is working for themselves, the mortgage banks in British Columbia are starting to take notice. Many have begun introducing Business for Self-Employed mortgage programs to help make the application process more straightforward.
While these options are a step in the right direction, there is no such thing as a self-employed mortgage. Rather, you are going to get a normal mortgage and you will have to jump through more hoops to get it.
In this blog post, we will discuss what you will need in order to obtain a mortgage.
What do you need to get a mortgage?
As someone who is self-employed, you will need to prove your income to any mortgage lender you apply to. Most lenders will want to see at least 2-3 years of financial statements or tax returns. The more information you can show, the better. You will need:
- Proof that you are the principal owner of the business
- 2-3 years of financial statements for your business
- An accountant
- A good credit history
- A proven track record of consistent work
- A sufficient down payment
How do you prove your income?
Being accountable and organized is key for any self-employed or freelance worker. In order to prove your income, you will need at least 2-3 years of accounts. It is recommended to get these put together by a chartered accountant.
There are a couple of common issues that may come up against someone who is self-employed and applying for a mortgage. Previously, you and your accountant may have been legally reducing your taxable income as a way to pay less tax. Although this will have saved you money then, it could end up costing you now. When applying for a mortgage, it is always better to be able to show the largest income possible.
Finding a mortgage
An experienced mortgage broker is essential when applying for a mortgage. They will be knowledgeable about which lenders are open to lending to self-employed and most importantly, who will be able to offer you the best rate.
When it comes to mortgages, there is no one-size-fits-all solution. If you’re unsure how to navigate through the self-employed mortgage options out there, talk to a Trusted Mortgage Knowledge Professional. Contact Milka Lukacevic of The Mortgage Centre TMK team, your local Tri-Cities Mortgage Broker.