Getting a mortgage is tougher for entrepreneurs and business owners

There’s always talk about the mortgage rates in Canada, and predictions as to which way they’ll go.  What hasn’t been a big part of the conversation is the ongoing tightening of the mortgage market, not just by governments and various provincial regulators, but also by mortgage lenders. In particular, they are frequently re-evaluating the rules around how the self-employed mortgage is treated.

Unlike traditional employees, self-employed individuals may find it challenging to provide the necessary documentation to prove their income. This is where mortgage brokers can play a crucial role. Here’s how we can help:

Understanding the self-employed landscape

Mortgage brokers specializing in helping self-employed individuals understand the unique challenges faced by this demographic. And, we are familiar with the various types of self-employment structures, such as sole proprietorships, partnerships, and corporations, and how they affect your mortgage application.

Finding the right lenders

Mortgage lenders don’t all have the same criteria when it comes to approving mortgages for self-employed individuals. I have access to a wide network of Canadian lenders, including those who are more open to working with self-employed individuals.

I strongly believe that the decision for which lender you go with must be based on which lender is going to be the best fit for you, for your goals, needs, and financial situation.  That means I focus on “customer first”, rather than “bank / lender first”.

Navigating income documentation requirements

One of the biggest challenges for self-employed individuals is providing proof of income. Unlike traditional employees who receive regular pay stubs, self-employed individuals often have fluctuating income or income that is not easily verifiable. Mortgage brokers can help gather the necessary documentation, such as tax returns, financial statements, and business licenses, to demonstrate income stability and capacity to repay the mortgage.

Self-employed people have a lot of tax write-offs

… and this is a good thing, isn’t it?  Well, it is a great way to reduce the amount of income tax you owe.  However, it is not such a great way to qualify for a mortgage, or at least, as large a mortgage as you might need.  Many lenders require that you show a two year track record of earnings on your “Line 150” net income on your tax return.  If you have a lot of write-offs, your Line 150 income could be quite low.  As such, you need a lender who is “business for self” friendly, and who understands the self-employed customer. 

Accessing “stated income” programs

Some lenders offer stated income programs, where self-employed individuals can attest to their income in a variety of non-traditional ways. This may include invoices, bank statements, and financial statements. I can help determine if a stated income program is the right option and assist in preparing the application.

Providing financial advice:

In addition to helping with the mortgage application process, a mortgage broker can provide valuable financial advice to self-employed individuals. This includes guidance on improving credit scores, and preparing for future mortgage applications.

Mortgage brokers give you more self-employed mortgage options

Securing a mortgage as a self-employed individual in Canada may seem daunting, but with the help of a knowledgeable mortgage broker, it can be a smooth process. We can provide the expertise and guidance needed to navigate the complexities of the mortgage application process and help self-employed individuals achieve your home ownership goals.

If you’d like to learn more about what a mortgage broker can do for you, check out this article.

For more information mortgage rules, and how they apply to you as a business owner, with no obligation, please get in touch!

Photo [c] Pemika Chedpiroon for vecteezy.com