Mortgages for Self – Employed Individuals
Approximately 15% of all people who are employed in Canada are self-employed. That is a huge percentage of the employment sector. Many of these individuals find it difficult to get a mortgage for a variety of reasons.
Reasons it Can be Difficult
One reason it can be difficult to get a mortgage when you are self-employed is that your income can be difficult to prove. People who are self employed often write down their income significantly so they owe less in income tax. In other words, they claim as much of their expenses as business related as possible. This lowers their “provable income” which in turn lowers the amount of mortgage they will qualify for. Another issue is that in order to qualify for traditional interest rates, you must have had two years of income tax being self employed. If you have not claimed income tax as a self employed individual for the two years previous, you will need to fit a specific set of guidelines and if you fit those guidelines you can obtain a mortgage.
You will have to provide additional documentation over and above what a person who is not self-employed will have to provide. This could include, but is not limited to:
· Business Financial Statements
· Previous 2 years Notice of Assessments
· Previous 2 years T1 Generals with Statement of Business Activities
· Articles of Incorporation (if incorporated)
Use a Mortgage Associate or Broker
If you are self-employed, it is definitely advisable to use a Mortgage Associate or Broker. We have access to a variety of lenders who have a variety of products geared to self-employed individuals. We have the knowledge and background necessary to help guide self employed individuals to obtaining a mortgage.