Obtaining a Mortgage for the Self-Employed

Entrepreneurs and the self-employed are the backbone of the Canadian economy. For that reason, it is crucial that when obtaining a mortgage, self-employed people understand what their financing options are and what the process will look like.

Self-employed individuals need to focus most of their time on their work and should not have to bear the weight of mortgage stress. In today’s clustered mortgage environment, it is difficult for non-traditional borrowers and families to understand what their options are, which can result in borrowers overpaying for their mortgage. To successfully obtain a mortgage, self-employed persons must understand what types of mortgages they have access to, and what the challenges and requirements are for each type.

Self-Employed Financing Options

As a self-employed person, many expenses will flow through your business and your personal income may not represent your true income. While these tax benefits are very supportive for entrepreneurs and the self-employed, it can make it difficult to prove a stable and true income on paper. However, there are some lenders that understand these intricacies, have worked with the self-employed before, and will lend to the self-employed

Certain banks, select lenders, and private investors have experience with lending to the self-employed and will be able to offer them mortgages. As many self-employed individuals can pay off debt that may not necessarily be reflected on paper, these lenders will offer stated-income loans. This means that lenders will ask self-employed persons to state their income without documentation and provide financing based off that information. This can be very beneficial for those looking for a straightforward way to get financing fast without disclosing significant business and personal information.

While stated-income loans will typically cost more on interest due to the additional risk taken on by the lender, there is a way for self-employed persons to make their loan more affordable. By providing lenders with the past few years of financial statements of one’s business, as well as previous pay stubs, one can usually achieve a lower interest rate than with a stated-income loan.

Requirements and Challenges

Depending on the type of loan a self-employed person is searching for, different amounts of information will be required. For stated-income loans, the only information required is what the self-employed person states was their personal income for the past few years. While this is quick, easy, and popular among entrepreneurs, lenders will demand a high interest rate to cover the risk they are taking on.

Alternatively, a self-employed person can make a case for their income being higher than what is stated on paper by providing the financial statements of their business and anything else that would prove their credit worthiness. These other documents would include historical tax returns, credit scores, and a notice of assessment. It can be challenging for a self-employed person to prove they have the financial security to secure a mortgage, however it may be worth the lower interest rate.

Another challenge is securing the right lenders who truly understand your unique situation and has had experience lending to self-employed persons in the past. Mortgage Wellness can help you find the right lender and negotiate the right financing terms that are most suitable for you.

How Gerard Can Help

Owning his own business has given Gerard Buckley a wealth of experience in purchasing property as a self-employed person. Gerard understands your situation and can help you acquire the best mortgage and financing rate for you and your family.

Owning his own business and advising growth companies has given Gerard a wealth of experience in purchasing property as a self-employed person. Gerard understands your situation and can help you get the best mortgage and financing rate for you and your family. As a result, he will be able to communicate it to the right lenders for you.

When you have Mortgage Wellness by your side, you have access to over 65 specialized lenders, many of which understand the challenges of lending to the self-employed and will be able to tailor a mortgage to your specific needs. Whether you need a big bank, smaller bank, trust company, mortgage investment company, or a private lender, Mortgage Wellness has the relationships to get you exactly what you need. Additionally, Gerard can navigate the difficult landscape of acquiring mortgages for the self-employed to his personal experience as a self-employed real estate investor. Gerard will help lenders appreciate your income situation and help you achieve a fair mortgage rate.

For this and other mortgage information, visit our blog at www.jaguarmortgages.ca

Mortgage Wellness, is located in Toronto, Collingwood and Owen Sound has access to over 65 specialized lenders and covers from Owen Sound to Orillia and GTA.

Please Call Gerard Buckley, Mortgage Agent @jaguarmortgages at 705-532-1182 for a complementary consultation.