Entrepreneurs are vital to the economy of Ontario, yet sadly being a self-employed typically means that it will be more difficult for you to get a mortgage than if you are a T4 employee. Lenders often see self-employed individuals as being higher risk because their income can fluctuate dramatically from year to year. Fortunately, there are lenders out there who know how to look at the bigger picture, and with a little bit of work it is possible for entrepreneurs to qualify for a mortgage.
The following is a look at your mortgage options if you are self-employed.
Traditional Lenders
Traditional lenders are institutions such as major banks and credit unions. For entrepreneurs, these are the most difficult lenders to obtain a mortgage from. In order to qualify, you will generally need at leas a 20% down payment and two solid years of provable income. Unfortunately, many entrepreneurs have a lot of tax write-offs which lowers their actual income on paper and potentially makes them ineligible for a mortgage from a traditional lender.
Alternative and Private Lenders
If you cannot qualify for a mortgage with a traditional lender, there is still a good chance that you will qualify for one with an alternative or private lender. Many of these lenders specialize in offering self-employed mortgages. These specialities can often be further broken down into the following sub- categories:
- Self-Employed with Poor Credit – If you are self-employed with bad credit, traditional lenders will see this as two major strikes against you. Private lenders however are generally much more concerned with your present earnings and future potential.
- Self-Employed with Low Income – Private lenders understand that there is a difference between an entrepreneur’s reported income and their gross income. Often private lenders who specialize in self-employed mortgages will add an extra 10-15% to the applicant’s income when they are calculating what they are eligible for.
- Self-Employed over the Age of 55 – One of the fastest growing demographics among the self-employed are those who are aged 55 and older. Big banks however often view entrepreneurs who are over the age of 55 as being especially risky because these individuals have less time to pay off their mortgage than someone who is younger. Fortunately, there are private lenders out there who specialize in providing mortgages to entrepreneurs who are over age 55.
If you are self-employed, it is possible to get a mortgage even if you have bad credit, low income or are over age 55. You only need to find the right lender.
For assistance in finding the right lender for your self-employed mortgage, contact Akal Mortgages today!
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