When you’re self-employed, finding the perfect mortgage is no easy feat. Oftentimes, self-employed Canadians find it challenging to get a mortgage, partly because income is usually hard to prove. Luckily, all hope is not lost – even if you’re self-employed, you can still find a great mortgage!
Who is Considered Self-Employed by Lenders?
Mortgage lenders will generally consider you self-employed if you:
- Work on contracts for different employers
- Are paid on a commission basis
- Run a business as a sole proprietor or with a partner
If you receive regular cheques from an employer, you are not considered to be self-employed.
Getting a Mortgage When You’re Self-Employed
When it comes to getting a self-employed mortgage, lenders might ask for a variety of documentation, such as:
- Your most recent Notice-of-Assessment
- Financial statements
- Corporate tax return
- Business credit card statements
- Profit-and-loss statements
Your mortgage broker will be able to create a simple list for you to follow to submit documents easily.
Tips for Increasing Your Chances
Self-employed borrowers are considered higher risk than other prospective buyers, which is why it’s often a challenge to get accepted for a mortgage. Luckily, there are a few ways to increase the odds of your application being accepted.
Plan Well Ahead
If you plan on getting a mortgage in the future, planning ahead will pay off. Speak to a professional to discuss your options and what you’ll need to procure a mortgage. Take a look at debt, the amount of income you plan on declaring, and any write-offs.
Maintain a Good Credit Score
Credit score is one of the most crucial aspects when it comes to applying for a mortgage. In Canada, the minimum credit score for a mortgage is 640-660, but mortgages with this score will come with a much higher price tag. Credit scores of 760 and up are considered excellent and will get you lower rates on your mortgage, as well as a higher chance of acceptance for self-employed borrowers.
Keep all your documentation organized and accessible for your application, and always have your taxes up to date! Besides making the application process easier on yourself, being organized also shows the lender that you’re responsible and dedicated.
Talk to a Professional Mortgage Broker
If you have questions about getting a mortgage as a self-employed borrower, talk to an expert! They’ll be able to guide you through all the steps of getting your own mortgage. As a highly experienced mortgage broker, I’ve helped hundreds of business owners and self-employed people get into homes (like this recent client!). Get in touch discuss your mortgage options!