Are you a small business owner in Ontario who dreads the lending process? We get it. The Big 5 banks won’t give your NOAs a second glance even after you explain the high level of your deduction game. They don’t care about the actual cash flow going through your accounts each month. They may even tell you it’s not possible to get a mortgage if your business is less than three years old.
But guess what? They’re wrong. And there are more than 80 other lenders out there who do want to help self-employed people get good mortgages.
Myth 1: It’s Too Difficult to Get a Mortgage
Sure, other small business owners have access to lending, but they have more resources than you. They may even have on-staff bookkeepers or administrative workers handling this kind of thing entirely. You just have you, and you’re busy at work. You don’t have the time to pursue a complicated and lengthy application process.
Good news – mortgage brokers exist and it is our job to act professionally on your behalf to find the best lending product on the market for your unique situation. We handle all the back and forth with the lender and present you with streamlined options and easy-to-understand figures so you can access your home’s equity, purchase a home or even build a home knowing exactly what your mortgage costs will be.
Of purchasing a home as a self-employed family and working with Buckley Mortgage, Mack Berthier of Fell Forrestry states:
“They helped my wife and I get exactly what we needed at the right time. We really appreciate all the interactions that we had, even on Sundays, which banks would never spend that kind of time with you! We really appreciate the time and effort he and his team put into our future.”
That isn’t to say there is no work involved on your part, however. An experienced mortgage broker will work with you to gather all the needed financial information and documentation at the beginning of the process. This helps avoid any unwanted surprises in the application journey. Knowing this, it’s good to have the following ready at hand:
- Most recent NOAs
- 12 months of business & personal bank statements
- Confirmation of paid income tax & HST
- Recent statements from all current debt products
Myth 2: The Best a Lender Can Do is Round Up Your Net Income
Perhaps you’ve tried to get financing before, but quickly realized you would be severely limited when you were informed that they could only use your net income multiplied by a very small factor. While some institutions do follow this rule, many do not.
To get a truer representation of your actual monthly cash flow, many lenders use what is called “stated income”. It is verifiable by your bank statements and allows you to access mortgage amounts that properly reflect your financial situation.
While ensuring that your business is in good shape with the CRA is still mandatory (no back taxes owed, please!), stated income gives self-employed business owners relief from their relationship with line 150.
Myth 3: Self-Employed People Can Only Obtain Simple Mortgage Products
Worried that your financial needs are far too niche? The fact is, there are lending products available for about as many needs as you can think of. Looking to purchase an upgraded property? These are products for you. Need to access cash short-term? There are products available for that as well.
But what about construction mortgages? Believe it or not, there are many options available to self-employed individuals looking to build. In fact, many custom home builders are self-employed themselves, meaning the industry has many different construction products on the market.
Brad Clark of BOVA Flooring recalls:
“When we started looking into building our own house, we got turned away by both a bank and a credit union due to our income type. With Gerard, we were able to finance our build from start to finish using different mortgage products depending on the needs of each build stage. Now that our home is complete, we have a normal mortgage that is inexpensive. Plus, we consolidated any existing debt payments we had, leaving us with more monthly cash flow than before we built.”
Myth 4: Self-Employed Mortgages are Way More Expensive
This final myth is one we hear the most often. Sure, you can get a mortgage, but you’re going to be charged way more than someone with traditional income confirmation. While there can be some extra costs involved, most applicants are actually surprised when they compare the numbers.
Where you can expect to see some higher costs are in the mortgage setup fees. Most of the time, these are comparable to legal or administrative fees and are included in the lending total, meaning you pay nothing more upfront, and the amount has little effect on your monthly payments.
But what about interest rates? As mortgage professionals, we here at Buckley Mortgage believe far too much emphasis is put strictly on interest rates, ignoring the bigger picture for almost any client. Of course – high interest rates are not preferable in any situation, but choosing the option with the absolute lowest interest rates is also often not the best for many clients. Mortgage flexibility, hidden costs and penalties can equate to just as much as a slight difference in rate, and people rarely look at these details.
For a self-employed person, affordable interest rates comparable to standard mortgage products are often attainable. In fact, in some scenarios, more appealing interest rates are available due to the simple fact that you are shopping outside the most common financial companies.
How You Can Get Started
Ready to stop reading and start your application? At Buckley Mortgage – Mortgage Wellness, not only do we have access to more than 80 different lenders, but we are also a self-employed corporation. We understand that each small business has a unique structure and equal individual financial needs. Not only will we find the best financial fit for your situation, but we’ll make sure you’re educated throughout the process, so that you fully understand the mortgage product you’re signing up for. Reach out and learn more today.
