Understanding the world of mortgages can be challenging for anyone, but for the self-employed, it often comes with added layers of complexity when it’s time to renew. While being your own boss offers freedom and flexibility, it also means that certain financial processes—like securing and renewing a mortgage—can be more difficult. 

Unlike traditionally employed individuals with predictable paycheques, self-employed homeowners must contend with fluctuating incomes, rigorous documentation requirements, and a more cautious approach from lenders. As the time for mortgage renewal approaches, these challenges can feel particularly pressing, but understanding the requirements of the renewal process can help self-employed individuals make informed decisions and secure favourable terms.

Mortgage Renewal Documentation Requirements When You’re Self-Employed

Renewing a mortgage can be a challenging process for anyone, but for self-employed homeowners in Ontario, it presents a unique set of challenges and opportunities, especially if you’re considering a new lender. Unlike salaried employees who can easily provide pay stubs and T4 slips to verify their income, self-employed individuals often face more scrutiny when renewing their mortgages. 

Lenders typically require detailed documentation to verify income, including several years of tax returns, and Notices of Assessment from the Canada Revenue Agency. This rigorous documentation process is necessary because self-employment income can be more variable and harder to predict, leading lenders to be more cautious.

The documents required for the mortgage renewal process may vary by lender and your individual circumstances. Typically, you’ll need to provide:

• Your personal and business credit scores
• A notice of assessment from the CRA for the past 2-3 years
• Proof your HST / GST has been fully paid
• A statement of your existing mortgage
• Information about outstanding debts or assets

Verifying Your Income

Income verification is another significant hurdle for self-employed individuals. While salaried employees usually have a consistent income stream, self-employed homeowners often deal with fluctuating incomes, which can make it harder to demonstrate their ability to make regular mortgage payments. This variability can lead lenders to view self-employed borrowers as higher risk, potentially resulting in less favourable mortgage renewal terms. Self-employed homeowners may need to demonstrate consistent income over several years or provide evidence of a strong business trajectory.

Many lenders require that CRA Notices of Assessment from the past 2-3 years be included with the mortgage application. Those who are able to provide this proof of income can generally access the same mortgage products and rates as traditional borrowers, while those who cannot must at least have a good credit history and provide a minimum down payment of 10%. 

Lenders may also ask for: 

• Financial statements for your business.
• Contracts showing expected revenue for the coming years.
• Proof that you are a principal owner in the business.
• A copy of your borrower’s business or GST licence or Article of Incorporation showing you are licensed.

Finding The Right Lender For Your Mortgage Renewal

Did you know that Canada has a specific mortgage for the self-employed? With careful financial planning and organization, you can present a strong case to lenders. For example, maintaining low personal and business debt levels, keeping accurate and up-to-date financial records, and ensuring that taxes are paid on time can all help improve a lender’s perception of risk.

Some lenders specialize in working with self-employed individuals and may offer more flexible income verification methods or consider other factors such as long-term contracts, retained earnings, or the stability of the industry in which you operate.

Working With A Mortgage Broker Can Make A Big Difference

If your existing lender has denied your mortgage renewal or if you are looking to find a new lender, working with a mortgage broker can make all the difference. Because it is difficult to find out which lenders specialize in self-employed mortgages, or have more favourable terms for the self-employed, using a mortgage broker has obvious advantages. Mortgage brokers have access to multiple lenders and have a broad knowledge of the mortgage market. Therefore, a broker can connect you to the lender most suited to your situation.

Want To Get The Best Options For Your Mortgage Renewal As A Self-Employed Worker? Give Me A Call

While self-employed homeowners in Ontario face distinct challenges when renewing their mortgages—primarily around documentation and income verification—there are also opportunities to secure favourable terms by being well-prepared and working with a mortgage broker. I can help you find the right lender for you with the best terms and interest rates. Contact me today at 705-315-0516, or book a consultation, and let’s get you the best mortgage renewal for your financial situation.