Self Employed and Mortgages?

27 Apr Self Employed and Mortgages?

So, you are self-employed and are looking at trying to get a mortgage. You are probably already aware of how difficult this can be especially after so many lenders have tightened up their procedures and added tougher guidelines. It is important to point out that even though it may be difficult, it is certainly not impossible to get a great mortgage when you are self employed.

What Is Required.
There are certain documents and pieces of evidence that you will need to show in order to satisfy the lending guidelines that are now in place. Generally speaking, you will need to show your income going back two years and this needs to be shown in your Notices of Assessment you filed with the government.

For some people, there may be a need to show company financials or your T1 generals as this is seen as being additional evidence to support your claims that you do indeed earn a certain amount of money each month. Finally, some lenders may also want evidence of your business registration or other documents that show your company is in operation and has been for some time.

What Happens If You Have Not Been In Business For Long?
If you have recently launched your business and have less than 2 years history, it can get a little more complicated. If the business you are operating is the same as your last job, lenders will typically accept your income. However if you have just started a completely unrelated business, you may have to put in those 2 years in order to get approved by a regular lender. Don’t fret, a mortgage broker may be able to assist you still in getting a mortgage with non traditional lenders.

What About Other Avenues?
The two scenarios described above are for you going through normal mortgage channels, but what about the private mortgage lender? A private mortgage may cost you more in interest and will typically have some fees attached, but private lenders are more flexible in terms of who they will lend to and will prioritize the marketability of the property you wish to buy over the details of your application.

The Mortgage.
Finally, we should mention differences in the mortgage itself when you are self-employed. With most mortgages you will find that lenders allow the borrower to pay an additional 15% in order to cover a number of missed payments without them being penalized as a result. This in itself is extremely useful for self-employed people as income can fluctuate. There are also other types of mortgages that may be useful for somebody in this situation and getting expert advice depending on your own personal circumstances is always advised.

Getting a mortgage when self-employed is possible and it merely involves you getting the correct advice and being able to prove your income. Keep yourself organized and have the relevant paperwork at hand and seek out a trusty mortgage advisor who can guide you in the right direction.