Self-Employed Mortgage In Canada
You’re not the only one if you’ve ever fantasized of working for yourself. Did you know that 20% of Canadians work for themselves? Ditching the traditional 9-5 job and breaking free from corporate red tape might have many advantages, but it can also present some challenges you may not have anticipated. Standard mortgages might create some particular problems for someone who is self-employed when it comes to purchasing a property.
What Is A Self-Employed Mortgage?
Self-employed mortgages are designed for borrowers who earn money from their own business or self-employment rather than from a job. When you’re self-employed, your income will be different from that of traditional borrowers who receive biweekly paycheques that are constant and predictable.
When you apply for a typical mortgage, the lender will check at your most recent tax return to see how much money you made. Due to tax deductions and reported expenditures, this sum might be substantially smaller for self-employed people. A self-employed mortgage accounts for these variances and gives you additional options when it comes to reporting your income.
Pros Of Getting A Self-Employed Mortgage
- You’ll get access to competitive rates.
- You can qualify for a higher mortgage amount.
- The approval process is quite efficient.
- You can save a lot of money on taxes.
Cons Of Getting A Self-Employed Mortgage
- You may not qualify at your bank
- Higher rates than conventional mortgages
Types Of Lenders That Offer Self-Employed Mortgages
There are a range of lenders who will provide self-employed mortgages, but it’s vital to keep in mind that not all of them will be the same. While “A” lenders may provide certain self-employed mortgage products, they will likely be much stricter with their applications and criteria than, perhaps, a “B” lender or a private lender.
Self-Employed Mortgage Qualifications
When applying for a self-employed mortgage in Canada, you must fulfil specific standards and adhere to certain criteria in order to be authorized for a loan.
VERIFICATION OF INCOME
You’ll have to give income proof in one way or another, regardless of the mortgage you apply for. There are three forms of income verification that are often used:
- Traditional income verification:You may check your work income by looking at your tax records.
- Nontraditional income verification:Examining your company’s financial documents and bank statements to establish real earnings.
- Stated income:You are unable to prove your revenue.