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Self Employed Mortgage

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What Is a Self-Employed Mortgage?

Self-employed mortgages are residential mortgages to purchase a home. Some commercial mortgages may also be self-employed if the buyer’s income source comes from self- employment. If you own your own business and your income is generated through that means, you may need to consider a specialized loan that ccommodates that need.

That is different from salaried employees. These individuals are employed full time or part time through an employer. Those who own their own business or operate otherwise as self employed have different ways of declaring their income in Canada. As a result, some lenders may see these loans as a higher risk than other borrowers. This could mean that loans are more expensive or may not be accessible in some situations.

If you are no longer working a traditional job with a 9 to 5 career, you may enjoy many other benefits, including the freedom to operate a business the way you desire. You may benefit from flexible work hours, growth opportunities, and even the ability to write off your business expenses. With many people creating their businesses like this, there has been an influx of people needing financial support to purchase a home. Self-employed individuals till need a mortgage loan to purchase real estate, and the difference is that they need a loan that is willing to accept  that they are not salaried employees.

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Self Employed Mortgage

Purchasing a home as a self-employed individual may sometimes become a challenge. Not all lenders offer loans to those with business income from this source, and some may charge higher interest rates or limit access to a traditional mortgage if you do not have income from a reliable source. CanadaMortgageBroker.ca can help you, and we can help you obtain a self-employed mortgage depending on your qualifications that is both affordable and offers the terms and conditions you need. Your first step is learning as much as possible about these loans and what they may mean for your home buying goals.

We Help Self-Employed Canadians Obtain Mortgages

Are you reading to apply for a mortgage loan? If so, allow our mortgage broker to help you. We will need financial statements, income  verification, and insight into the minimum down payment you plan to make. We can help you find private lenders, B lenders, and others willing to work with you to provide you with a loan. You can get started by completing a mortgage application now.

Why Should You Consider a Self-Employed Mortgage?

Self-employed mortgages may be ideal for people with business income instead of employment income. If this is what you are facing, we highly recommend taking a closer look at these specialized loan offers. There are many reasons these loans may be the right choice for your needs.

Competitive interest rates

Compared to a standard mortgage interest rate, self employed mortgages typically have a lower rate for those who need them. Depending on your financial circumstances, you may find that these loans may be an excellent overall choice for your needs. Interest rates may be the lowest for those with enough down payment. You also need to meet the stated income required for the loan.

Easier qualifications

A self-employed mortgage loan may be more accessible for you to obtain than other loan offers, including those from national and local banks and credit unions. Some of these come from private or B lenders, meaning you may not have to meet the exact credit score requirements, and you may not need to have as large of a down payment. If you hope to buy a home and have a stable income, you should be allowed to do so with the help of a stated income mortgage. Let our team help you to navigate the process of getting a self
employed loan for your needs.

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How Does a Self-Employed Person Qualify for a Mortgage in Ontario?

Each lender has specific requirements for an individual to follow to obtain a self-employed mortgage. This may also differ based on the type of mortgage loan you select. To qualify, you will need to meet specific goals. Here is a look at some factors that may play a role in that process.

Self-Employed Individuals and Mortgage Insurance

CMHC self-employed mortgage insurance is likely a requirement for many borrowers. Self employed workers may need this type of insurance to minimize the risk the borrower presents to the lender. One key concern is that CMHC does not allow for stated income mortgages. In addition, you must be in business for at least 2 years. The lender will require you to provide a Notice of Assessment, credit reports, GST returns, business license documentation, and other financial statements to help verify the stability of your loan. If you can qualify for this type of self-employed mortgage, you may qualify for the same monthly payments and qualification criteria of traditional mortgage loans. For some, the CMHC self-employed mortgage loan program is a viable option because of those benefits.

This may include loans for up to 25 years, a loan amount of up to $1 million, and a loan-to-value ratio of as much as 95%. Are you unsure if you qualify for a self-employed mortgage? You do not have to guess about this. Self-employed individuals can apply for a loan with our team today and learn more about their ability to qualify. We may be able to help you qualify with or without mortgage default insurance, depending on lending  qualifications.

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Types of Mortgages for Self-Employed Individuals

Applying for a mortgage as self-employed may seem very complicated, and that is because there are a variety of different loan options available. Let’s run down some of those here so you can decide what is best for your needs.

Stated income mortgages

A stated income mortgage typically is the highest risk option for lenders. In some cases, these  loans typically have significant requirements from borrowers, including a down payment of 35%.  They usually are much unlike conventional mortgages as their requirements tend to be much  higher. In this type of loan:

  • The lender does not verify income. Instead, the loan is based on what you state your income is.
  • You do not have to provide income verification documentation. Your income should be reasonable for the industry you operate in.
  • Lenders determine many of the rules here. There are fewer lenders for this type of loan  than others.
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Insured stated income mortgages for self-employed

Another potential option for self-employed mortgages is called an insured stated income  mortgage. Those who do not have a large down payment but still want to use a stated income  mortgage may wish to pursue this option. Within it, you need to pay an insurance premium as a  component of your monthly loan payments.
If you qualify for this loan, which more people do, you will not have to have as large of a down  payment, and it may be as low as 10% from lenders. In most cases, other qualifications apply,  including having a good credit score.
There are several ways to obtain mortgage insurance. This includes through Sagen, which used  to be called Genworth Canada. You will need to verify the history and type of business you are   operating, and you also have to be in operation for at least 2 years to qualify. This type of  insurance program is available to those buying a home they plan to live in, with no more than  two additional units with rental income. This program does not approve those who earn self employed  commission as income or have a previous bankruptcy.

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Self-Employed Mortgage Alternatives

Self-employed income may seem very limiting to many people in obtaining a loan. However, mortgage financing does not have to come from traditional “A” lenders. Other options exist that are not from a local or national bank but from alternative lenders.

Answering Your Questions About a Self-Employed Mortgage

You may have many questions about how this loan may help you. As a mortgage broker, we can provide insight into your options and what to expect from the process. Here are some common questions borrowers often have when they are self-employed.

Yes, CanadaMortgageBroker.ca can help you obtain the loan you need as a self-employed individual.
We can help you navigate various loan options, including those from traditional lenders and
private mortgage lenders. With a wide range of solid relationships to count on, our team is here
to answer all of your questions and ensure you get the support you need.

Income verification is a big part of qualifying for a self-employed mortgage, and each lender is a bit different. However, most want to see any verification of self-employment income you can offer. Traditional income verification is the most common option. Lenders want to see your gross and net income as a business owner, which may come from tax return verification. In nontraditional income verification, the lender will look at financial statements, actual income as reported on your business tax returns, and other financial documentation to determine how much income you have. You may qualify for a stated income mortgage loan if you cannot provide this information. In this case, you tell the lender how much income you have.
With the help of mortgage brokers, it may be easier than you realize. Incorporated self-employed individuals may qualify for both fixed mortgage rates and variable rate mortgages, and these tend to have good terms and mortgage amount options. The key is to present yourself in the best way possible. Before you make a mortgage request, take care of any unpaid taxes. Be sure you have verifiable income whenever possible. It also helps to pay down credit cards and be able to document your future income expectations. Good credit history may make it easier for you to obtain a loan – and get an affordable one. Our mortgage brokers can help you in many situations. Getting a traditional mortgage loan with self-employment income can be hard if you cannot verify that income. That is when private lenders may be your best bet.
Yes, you can refinance a mortgage loan if you are self-employed. Self employed Canadians can follow the same process for applying for a loan. The lender will go through the same overall steps to verify your income, determine which loan programs are available, and verify the home’s value. Unlike verifying the purchase price of the loan, though, they will likely require an appraisal on your home to ensure it is worth the amount of money you are requesting. In some situations, you may be able to get financial institutions to refinance the value of the loan you owe through these loans and an added debt you have. If you are considering this option, fill out our self-employed mortgage application and let us know your specific mortgage request. You may be able to get a mortgage with competitive mortgage rates and lower payments that better fit your financial needs. Let us know what you are looking for by refinancing.
The type of documentation requested is up to the financial institutions themselves. You will be asked for as much information as possible about your income and financial health in many situations. Some of the most likely financial documents borrowers will need to provide include:
  • Business registration number and business license information
  • GST and HST account number, and proof indicating full payments
  • Personal credit scores
  • Business credit scores
  • Expected future income based on revenue projections for the coming years
  • Bank statements
  • Notice of Assessment, often two to three years’ worth
  • Articles of Incorporation if you have incorporated your business
  • Financial documents showing the revenue of your business
Most lenders want to be sure you have a steady income. The more information they have to show this, the lower the interest rates are likely on your self-employed mortgage loan.
It may be possible to obtain a self-employed mortgage, including a CMHC self-employed mortgage if you just started working. If you do not meet the two-year business running history requirement, you must show you can meet other expectations. That may mean that you need sufficient cash reserves, and excellent credit, or you may be able to qualify if you can show you acquired a well-established business. Each lender is different in its requirements. Our mortgage broker can help you to determine which loan options may apply in your situation.
The amount you can borrow depends on factors such as your credit score, income, and down payment. Self-employed borrowers may need to be able to borrow as much as 95% with mortgage default insurance. Without mortgage insurance, you may qualify to borrow a loan worth up to 80% of the value. This assumes you can provide proof of your income. Other loans, including income-stated mortgages, may have lower borrowing requirements. If you have a home, you wish to buy and know the likely purchase price, reach out to our team. We can help determine if you qualify for these loans, and we can help you find the most applicable loan options for your needs as well.

Ready to Get Started? Self-Employed Workers, Start Here!

CanadaMortgageBroker.ca is ready to help you obtain a mortgage to help you buy the home you desire. If you are ready to determine if you qualify for these loans, reach out to us online or give us a call to learn more. Getting a self-employed loan is more likely to happen in the following situations.

  • Gather your net income information and, when possible financial documentation to verify it, including bank statements. Mortgage lenders need to see if you have the means to pay back the loan.
  • Be flexible in terms of insurance premiums. Some people do not want default insurance because it has an ongoing monthly cost. Some lenders may require it, though, if you do not have verifiable income.
  • Provide all insight into your business, including the Notice of Assessment payments, tax deductions, and your revenue.
  • Allow our team to compare numerous loan products for you. The goal here is to ensure you know what all of your options are. That includes the A lenders, B lenders, private loan lenders, and others.
  • Know what to expect from the mortgage market. Variable mortgage rates and fixed rates may be available. The better your credit score is, the lower the rates will be. At the same time, interest rates could rise in the coming months. For that reason, do not wait to apply for a loan.
  • Let our team then go to work for you. We will look at many loan products that may fit your situation. Even if you have some limitations on income verification or a new business, we may still be able to help you.
  • You can count on us to provide exceptional solutions for your borrowing needs. Our team is dedicated to providing outstanding resources and information to meet your needs. If you are in the market to buy a home, you want the best mortgage amount available at the best rate. You also want to be sure you are getting into a loan that fits your personal budget with a payment you feel comfortable making.
  • We work hard to ensure you have those types of options. The lending scene is often changing, and there is no doubt that the loan options may become limited. We aim to help get you into your desired home as soon as possible.
  • Contact us today for a formal application or just a quote for our services. We are happy to openly discuss your options with you when you reach out to us today.
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