What Is Required To Get A Mortgage When You Are Self Employed?
Nothing beats being self-employed and having your own business. Owning a business gives you the pride of being your own boss, ability to take control over your finances and personal freedom. However, it is not always easy for self-employed individuals to get a mortgage.
Why Getting a Mortgage Is Not Easy For The Self-Employed
It is very challenging for self-employed individuals to get a mortgage. Here are few of the reasons why:
- Failure to provide convincing proof or evidence of income
- Excessive spending by many self-employed individuals in order to reduce their tax liabilities.
Most lenders will ask for a higher downpayment and other documentation if your notice of assessment does not meet the requirements.
Related Article: Why is Saving Money So Hard?
If you are self-employed and you want to get a mortgage here are a few things you need to have:
- Proof of income/notice of assessment for at least 2 years.
- Your business’ financial statements
- Contracts showing expected revenue for upcoming years
- Proof of being the principal owner of the business
- Credit score for you and your business.
- Proof that your GST and HST is paid in full.
- Proof of downpayment. 15%-20% downpayment helps.
If an individual has income tax arrears, they automatically will not qualify for a bank mortgage. They either keep making installment payments to the CRA or they can get a private loan to pay out the debt and roll everything into a prime mortgage at a later time.
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