In Canada, almost 20% of people are self-employed. When you’re self-employed, getting a mortgage is not as difficult as it may appear. Although mortgage approval criteria are strict, private self-employed mortgages has made it possible to get a quick approval. Before approaching a mortgage lender, you should make sure that you are prepared well in advance. In order to be prepared, you need to understand and be able to provide any and all documents required to help you meet the criteria. Here are 5 important things for your to consider.
What Criteria or Documents Do I Need to Provide When Applying for a Mortgage?
To improve your chance of approval you must be able to:
- Provide documented proof of your self-employment income (Income Tax Notice of Assessments from the Canada Revenue Agency)
- Provide proof that you can repay your mortgage for the entire term duration
- Provide proof of any savings versus your current rent payments
After you have collected all of these important documents, you can start to prepare other supporting documentation to accompany your application.
What Other Supporting Documentation Do I Require for My Application?
As a self-employed individual it’s important to keep your finances in order, or even better, hire a bookkeeper to do it for you since you have to submit this information with your application. Here is a list of the important information that you will have to submit:
- Your financial statements
- GST/HST notices showing a zero balance
- Proof of future expected revenue (Contract, Agreements, etc.)
- Equifax and/or TransUnion credit scores
- Proof of business ownership
- Your GST registration number
- Your Incorporated License
Understanding Default Rates for Self-Employed Individuals
Once you are able to provide acceptable proof of your self-employed income, and all other supporting documentation, your mortgage broker will explain what default insurance rates are and how they can affect your mortgage. In general, most insurance policies do require you to pay a premium and your mortgage loan is no different.
However, if you are unable to provide the proof that is required, your down payment will more than likely be at a higher percentage. In this case, you may also be restricted to go with a certain lender.
Navigating the Mortgage Industry
Whether you are self-employed or not, many people find it difficult to navigate through the mortgage industry and/or processes without help. This is especially true due to the fact that not every lender specializes in mortgages for the self-employed. It’s highly recommended to utilize a mortgage broker to assist you throughout this process. Since every situation can vary, these experts can access numerous lenders and share their mortgage knowledge with you, turning you into a smart buyer.
Can I Only Get a Self-Employed Mortgage If I’m Buying a New Home?
The answer to this question is quite simple, No! A mortgage broker will speak to you about your situation and help you to determine the best type of loan to apply for prior to starting the application process. Whether you are looking to get a loan to buy a home, business, renovate, personal needs, or to consolidate your debt, an experienced mortgage broker can help you.
Make the most of your mortgage broker and get in touch with AKAL Mortgages today! When we say YES! We stand behind our promise.