Canadians who are self-employed are trailblazers for our economy. However, when you’re self-employed, there are more hurdles to overcome when trying to get approved for a mortgage. Some lenders typically don’t see self-employed people as ideal borrowers and it can be difficult to find a lender who even wants to work with someone who is. Because of this, you can also expect interest rates to be higher for self-employed people looking for a mortgage. Perhaps you’ve experienced these or other difficulties when trying to secure a mortgage in the past yourself though the uncertainty associated with being self-employed should not impact or limit your ability to buy the house you’ve been hunting for. So, how is a self-employed individual to navigate the mortgage world? With an experienced mortgage broker by their side armed with these key tips:
Have at least 2 years of tax returns available
The biggest issue lenders typically have with self-employed people is the uncertainty of income. Usually, it’s unsteady, so you will need to prove that you do have a stable source of income and a consistent work history. That is why having at least 2 years of tax returns on hand and in some cases, additional documents surrounding the income of your business or any major losses your business might have had is important to the process.
Be careful with tax deductions
As someone who is self-employed or a corporate business owner, you know all about tax deductions. These are obviously great tools to reduce your tax bill at the end of the year, but too many can affect the likelihood of you getting approved for a mortgage. The reason for this is because lenders review your income after taxes. So, when you’re thinking about buying a house, try to take fewer deductions, at least for the 2 years of tax returns you need to have available. Doing so will help show a higher annual income. Yes, you may be paying a bit more in taxes during that time, but it will also increase your chances of being able to get approved for the mortgage you want and need.
Make sure you’re in top shape to buy a home
Your tax returns are only the half of it. You need to make sure that any other influencing factors that could affect your likelihood of getting a mortgage are in good standing. This means ensuring your credit score is in good standing, your debts are low or paid off, and the number of funds you have on-hand is sufficient to put down a healthy-sized downpayment. If your income isn’t steady, you need to be able to prove that the rest of your financial standing is healthy to make up for it.
Work with a mortgage broker who really gets you!
Just because you’re self-employed, does not mean you have to pay a higher rate or jump over any crazy hurdles to get approved for a mortgage – it just means you need to prove your income a little bit more than the rest of us. That’s why it’s important to work with a mortgage broker who can give you the right financial guidance and not send you out the door at the sound of your job title. That’s where I come in. With my assistance and professional advice, I can show you the different options that are available to you. You will also gain access to a much wider range of lenders who are open to working with self-employed business owners and therefore will be more likely to be approved for a mortgage loan. Let me take the stress out of your mortgage application, while you take care of your business. Call me, Darren Robinson today at (705) 315-0516 and we’ll get to work on getting you the mortgage you deserve!