Mortgages For Self Employed

Self-employed? Arranging a mortgage can be quicker and easier than you think.

Over the years an increasing number of Canadians have become self-employed, often because of corporate downsizing or, in some cases, the desire to leverage their knowledge and experience in an entrepreneurial environment.

According to Statistics Canada, approximately 12 per cent of Canada’s work force is self-employed. Self-employment has numerous benefits and certainly some challenges as well. Often, self-employed individuals are surprised when they find it difficult and very time consuming to secure a mortgage. They quickly learn they don’t fit the model most mortgage lenders prefer -- traditional full-time employment where pay stubs prove income and stability.

Many self-employed individuals do not meet the criteria laid out by their lending institution, even though they are financially sound and can easily maintain their payments. After a long and complicated process to prove the ability to service their debt, the information provided may not be good enough for their financial institution. Lenders typically want to know that payments can be made for the life of the mortgage, not just over the next year.

Small business owners are usually required to provide lenders with two years of financial statements. However, assuming their accountant has used all available tax principles to minimize the company’s profits, these financial statements may not be a true reflection of their ability to service their debt obligations. Consultants, contractors and those in commission sales can find it equally difficult to satisfy their lender’s need for employment and revenue verification.

The good news if you are self-employed is that the lending landscape has changed. Certain lenders are targeting this market segment and have launched products specifically designed to meet your needs. You may, in fact, be able to get the mortgage you want without the time consuming process of providing income verification. If your credit rating is good, you could qualify based solely on your stated income, limited employment verification, and confirmation that you don’t have outstanding taxes. Imagine, mortgage approvals tailored to you!

So if you’re self-employed, your mortgage needs and home ownership dreams don’t necessarily have to be compromised just because you don’t have a conventional job or pay slips. And that’s good news for the many Canadians who want the challenges and benefits that go along with self-employment.

For more information contact Laurie Baird
Consultant, Mortgage Intelligence Inc.
Phone (250) 862-1802 Fax (250) 712-0209

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.