Recent trends have shown that more people are opting for self-employment in Canada and other parts of the world. The benefits of this type of employment are many, and they include tax benefits, unlimited opportunities to grow, and more control over working hours. Most of the big cities in Canada already have most of the residents shifting from the regular 9 to 5 employment to starting their businesses. The main source of motivation for those making the shift is the tax privileges. The tax advantages for businesses and corporates are usually available in different forms, such as transportations, lunches, or education write-offs. You can save thousands of dollars every year through all these tax exemptions without worrying about any legal repercussions. Your accountant can give you more information about how to benefit from tax exemptions. They’ll help you explore all the tax categories to maximize your profits. Although self-employment has many advantages over regular employment, it also has the disadvantage of mortgage accessibility.
The changes in mortgage regulations have only made it harder for borrowers with businesses to access mortgages. Nowadays, it’s nearly impossible to get traditional mortgages if you don’t have a stable 9 to 5 job, and that is where a self-employed mortgage comes in. It is a type of loan that is usually given to self-employed people. The mortgage can be used to purchase domestic or commercial properties as first-time or subsequent buyers. It can also be used to consolidate other loans, pay for school fees, or do home renovations. In Canada, business or company owners and other self-employed people don’t declare their wealth like formally employed people. In cases where they do, their declared wealth isn’t usually enough for the regulations set by traditional lenders. It is, therefore, common to have your bank reject your mortgage application, even if you have several accounts with them. They will put you through a long and frustrating application process only to end up denying you the mortgage.
The need for self-employed mortgages continues to grow, and since it can only be given by private lenders, you will need the help of mortgage brokers. Certified Mortgage Brokers can help you find the best self-employed mortgage lenders anytime you need them. The lenders in this category don’t usually go for stellar credit histories, and they don’t follow the same rules as banks. They tend to check for proof of income in the form of tax returns, bank statements, or business contracts. The competition between private lenders offering self-employed mortgages also drives them to offer you better terms. You can choose between variable and fixed rates and get the most competitive payment schedules in the market. With private lenders, you won’t have to go through tedious application processes or get turned away because you have unconventional income sources. When you work with good brokers, it will be easier to overcome the challenges of the mortgage acquisition process and get quick approval. Contact Certified Mortgage Brokers and choose one of the best mortgage lenders for the self-employed category of people.
Despite the growing numbers of self-employed Canadians, the self-employed find it more difficult to obtain a mortgage than those who work for a salary. Traditional lenders make it very difficult for the self-employed to get a mortgage as they consider them a higher risk. More than 20% of Canadians are self-employed. Banks and other private lenders want to feel confident that they will get their money back when dealing with someone who is self-employed. They have less ways of authenticating the stability of the income so as a result they create more strict rules to protect themselves.
You may be wondering what your chances are of successfully getting a mortgage if you’re self-employed. Despite the fact that there is a significant amount of self-employed people with a stable income they still encounter difficulties when seeking out a mortgage. Self-employed individuals are faced with more strict rules and treated based on the type and amount of their income. Banks and other private lenders want to feel confident that they will get their money back when dealing with someone who is self-employed.
In addition to the tax assessments, traditional Toronto banks will require a number of other business documents. These will include business financial statements, your credit score, financial planning and proof of business ownership amongst others. If you are self-employed Certified Mortgage Brokers Toronto can team you with the lender that offers the best rates for the self-employed. We have a list of established investors with whom we partner.
With Certified Mortgage Brokers there will be no issues because we are not biased towards self-employed individuals! Due our expertise and knowledge in the field, we can easily assess your situation and make it possible for you to obtain a mortgage even if you cannot prove the consistency of your income in a conventional way.
Although many banks don’t recognize it we know that your tax assessment probably does not correctly reflect your income. Most savvy businessmen will fully utilize their allowable tax-deductible expenses. In this way, net income is reduced meaning that you qualify for a lower mortgage or you may not qualify at all.
The lower declared income will also have a negative effect on the debt-to-income ratio which represents the percentage of income that you use to service your debts. Some private lenders may allow certain expenses to be written back when calculating the debt-to-income ratio.
Because of your lower net income, your Toronto mortgage broker may suggest that you use mortgage products that allow “stated income”. You are likely to pay more interest, but declaring higher income and then paying additional tax, will probably cost you more.
Stated income is calculated as income that you could reasonably expect to earn in a business of your size in your industry.
You Can Obtain Approvals Rapidly
Applying for a mortgage in your bank takes a lot of time, and usually, there’s no guarantee that you will be approved. With a self-employed mortgage in Canada, you can get a response within 24 hours, and you won’t have to follow the extensive processes that banks have. Sometimes, the duration of the application differs depending on how complicated the regulations for the mortgage you want are. In most cases, it doesn’t take longer than 48 hours. Your credit status won’t play a role in getting the mortgage, which also speeds up the process. It also allows you to get a loan even if you have pending credit cards and utility bills. Certified Mortgage Brokers can make the application even easier. We will get you the right lenders, depending on the type of mortgage you want and your financial status.
Banks Make It Hard to Qualify
When you are self-employed, you don’t have the luxury of predicting when the next paycheck will come in, like someone who has a 9 to 5 job. Your inability to predict your next income amount is also a disadvantage when you need a mortgage from the bank. The traditional banks prefer the security of regular employment, and the few that accept self-employed borrowers have stringent measures that may limit you. You may not get the amount you need or negotiate for better payment terms. Your only solution will be to approach private lenders, and we can help you with that. Contact our brokers any time, and we will get you a list of lenders that will give you the flexibility you deserve in the type of mortgage you want.
You Can Negotiate Mortgage Rates
Low mortgage rates can help you save a lot of money in the long run. With traditional lenders, you don’t always get an opportunity to negotiate for the lowest interest rates because they give borrowers pre-determined rates. Private lenders try to provide customized rates that are suitable for Canadian borrowers according to their situations. You also get a chance to further reduce the rates by putting down a large down payment, proving that you have sufficient income, or using the CMHC insurance if you can’t afford a large deposit. A qualified mortgage broker can help you calculate and compare the premium and rate savings to ensure you make the most profits. We can also help you acquire the no proof of income mortgage in Canada if you can’t get your documents and still get fair rates.
Rates Might Be Higher Compared to Regular Rates
Private lenders may not concentrate too much on your sources of income, but that doesn’t diminish the risks they are taking by giving you the mortgage. The only way for them to compensate for the risks is through higher interest rates. Even though they don’t pay a lot of attention to your credit history, having credit card debts and other types of loans can drive up the interest. Most lenders want to know that they can trust you to pay back the mortgage within the agreed-upon terms. Too much debt can be interpreted as a sign that you’re not trustworthy with the loan payment. Try to clear off some of your credit card payments and get a large down payment. You should also consider CMCH insurance if you don’t have enough cash upfront to reduce the mortgage rates.
Advantage of Saving Money on Taxes
A business or company owner gets an opportunity to save a lot of money every year on taxes. Those employed in regular jobs don’t usually get the same chances. If you enjoy the tax exemptions, getting a mortgage will not interfere with that privilege. You can still qualify for higher mortgage amounts and choose between fixed and variable interest rates with the loan. You can also get the best mortgage terms and the most competitive self-employed mortgage rates in the Canadian market. Our brokers will avail the right lending channels to ensure you get the best options without affecting the tax exemptions you qualify for.
The investments you can make with this mortgage are endless. Most lenders don’t look for proof of income for self-employed borrowers and will be willing to give you the amount you ask for so long as you prove that you can pay it back. As opposed to traditional lenders that will ask for your proof of income after all tax deductions, these lenders sometimes consider the value of the property you have and other unconventional income sources. You can easily qualify for higher amounts suitable for the investment opportunities you are targeting. The tax exemptions can also work in your favor. Even if you deliver the tax return documents for the mortgage, your net income will be significantly higher.
One of the main challenges for private lenders is calculating the self-employed salary. Traditional lenders can easily calculate the salary by determining the average income of the borrower based on the tax returns for the previous two years. They usually look at the gross income before the write-offs. Some lenders will go the extra mile and consider additional sources of income, such as part-time jobs.
Many lenders will also consider your credit score and history when calculating the mortgage. Huge outstanding credit card debts can put you at a disadvantage, so you should try to settle them before you apply for the mortgage. You can also use a portion of the mortgage to consolidate the remaining debt.
Taking advantage of the corporate write-offs to get rid of some of your expenses is always a good move as well. It reduces your income tax tremendously, but you have to remember that it could also reduce the amount of mortgage you qualify for.
Traditional lenders will calculate first-time home buyer self-employed mortgage by checking line 150 of your tax return. If your annual income is $100,000, and you write off a total of $60,000, you will have $40,000 reflected as your income on the T1 tax return. If that income increases to $150,000 the following year, and you write off $80,000, the amount on line 150 of your tax return form will be $70,000. Your bank will calculate your income as the average of those two net salaries, resulting in $55,000. They will use this to figure out the amount of mortgage you’ll be able to afford.
Self-employed mortgage lenders in Canada understand that business owners use write-offs to reduce taxes. They don’t focus on the net worth indicated on the tax return forms only when calculating your income. They will consider the gross income before the deductions. For example, if the business brings in $120,000 the first year and $150,000 the second year, and you write off $60,000 and $ 90,000 respectively, your income will still be $135,000. They will use that when calculating the mortgage amount you can afford.
Although private lenders use the same method that traditional lenders use when calculating mortgages for the self-employed with 2 years accounts, they give borrowers a better chance of real mortgage acquisition. Some of the lenders even add extra income sources that aren’t included in your tax returns or official reports. If you have a different job you do on weekends or during holidays, such as driving an uber, the lender will add the salary from that to your total income. Look for lenders that specialize in self-employed mortgages in Canada to enjoy all these benefits. They will allow you to get the mortgage you deserve even when you have large credit card debts.
|HELOC||4.2% (prime + 0.25%)|
First National Financial
Street Capital Bank
|5 year variable||1.15% (prime - 1.3%)|
|3 year variable||0.99% (prime - 1.46%)|
|Line of Credit||Starting at 3.00%|
|Equity Loans||Starting at 5.99%|
|Private Mortgages||Starting at 4.99%|
As a new self-employed mortgage borrower, your first instinct may be to go to your bank for the loan. However, given the regulations that banks have to follow, it may be impossible for you to get the mortgage approval. Sometimes it may take a lot longer than ideal for your situation, and sometimes you may be denied the loan outrightly. Most banks see low income as too high risk, which doesn’t go well with self-employed people who deduct expenses from their income for tax reprieve. If your income appears low on paper, even if you have a great credit score and a lot of money in your savings account, most banks will not want to give you a loan.
You don’t have to give up looking for the mortgage you need just because your bank can’t give it. You can explore several other options, especially private lenders. These mortgage lenders focus on the debt-to-income ratio, which means they calculate all the deductible expenses to make your income higher. However, just because they are the best alternative doesn’t mean it’s easy to get a mortgage from them. They will give you a real consideration and give you the mortgage amount you want, but it will come at the cost of higher self-employed mortgage rates and additional fee charges.
On the other hand, private lenders will give you personalized services and provide the assistance you need even if your credit score isn’t high enough. Try to get your tax documents for the mortgage ready before applying. Update all your business documents and confirm their accuracy as well. Applying for the mortgage through a mortgage broker can also increase your chances of getting the best deal. Certified Mortgage Brokers will make sure you meet the best mortgage provider for self-employed people depending on your financial goals.
Getting a self-employed mortgage in Canada is easy, but adequate preparation will make the process easier. You have to remember that the mortgage will most likely be a private one, which means it will have a short term and may have high-interest rates. You must also consider the possibility of not having the same amount of income you expected from the business, and that can affect your ability to keep up with payments.
Find out the additional fees you may have to pay, as well as the down payment. Look for a CPA letter for a self-employed mortgage, and collect all the other relevant documents. Try to improve your credit score and manage most of your debts. These will get your finances in order before mortgage application. A good mortgage broker can handle most of the work on your behalf and search for ideal private lenders with the best mortgage offers.
Whatever you’re investing in, the chances are that you will have to pay some money upfront. The money is known as a down payment, and it is deducted from the total purchase price. The more you can afford to pay, the less your mortgage will be, and that will result in lower interest and fewer monthly payments. Having a large down payment can also make the mortgage application process go faster. The common rule is that if you need a property that costs less than $500,000, you will need at least 5% of that amount as a down payment. For properties that cost between $500,000 and $999,999, you will need an extra 10% of the money in addition to the first 5% for $500,000. Any property that costs over $1 million will require 20% as a down payment. In most cases, any down payment that is less than 20% will need mortgage loan insurance. The best solution is to try to save as much money as possible for your down payment.
Credit scores are usually rated in five categories, namely, excellent, very good, good, fair, and poor. These categories and scores may slightly differ depending on the credit bureau being used. However, the rating process is the same across all credit bureaus, and your score will reflect your financial situation. The higher your score, the more lenders will trust you and give you the funds you need. It will also increase your chances of getting lower rates from mortgage pros Canada that only consider giving reduced rates to those who have excellent scores.
Make sure your score is 660 or more. Try to improve your credit report as well by making timely payments, reducing your debts, and closing some of your accounts. All these contribute to your credit history, which is included in the report. They also show that you can manage your funds properly, and that can improve your score. Check your score online with Equifax or Transunion before looking for a mortgage lender.
Keeping your records can be challenging, especially when you have multiple sources of income, but you have to try to keep everything in the right order. Most banks will only consider giving you the money you need if you have a proven financial track record. They need to see that your business is successful, and you can pay back their money at the agreed-upon time. The most important records are for the previous two years. If you’re getting a mortgage with a self-employed partner, make sure their business also has a good history. Your records should portray as much stability as possible to put the minds of your lenders at ease. Knowing the market interest rates helps. If the rates have dropped, you can take the chance and apply even if you don’t have your history records. You can also work with a mortgage broker to help you get all the necessary documents in due time.
It’s not enough to have all the required documents; they must also be accurate. Check for any errors or inconsistencies that could halt your mortgage approval process. Make sure the records are also well-organized. How you present them will show the potential lender that you can take care of the mortgage. A mortgage broker that is already familiar with the process can help you overcome all the hurdles and apply successfully.
Our background knowledge in this field will ensure you prepare all the documents accurately before you get to the lender. You must understand the different aspects of mortgage applications and the documents for each. We will help you arrange all the records, including proof of down payment, tax returns, lawyer information, and purchase agreements accurately. Our broker will double-check all the documents to ascertain that they are detailed and precise to ensure nothing goes wrong with your application.
A mortgage is a huge debt that will add to any loan you’re already servicing. Your ability to pay back the mortgage is dependent on your ability to pay the other debts. If you can’t keep up with other payments, you won’t manage to pay your mortgage. That is why sometimes you can take a mortgage to consolidate your other debts and only leave one loan to service. Try to pay off the other loans before applying for the mortgage. Your regular bills are also considered as part of your monthly debts, which means that paying them on time is crucial.
Your credit card bills and other utility bills will reflect on your credit records. Try to reduce them as much as you can to show the lender you’re good at financial management. They don’t have to be a zero balance; they should be low enough, so they don’t overwhelm you after you get the mortgage.
Your business and financial history will serve a great purpose to the lender, but only if they are recent. You don’t need financial records that date back ten years. The documents are meant to prove your income and subsequent ability to pay the loan. As such, your lender will only be interested in recent documents (the last two years) that show the current state of the business. Understand that outdated documents can be misleading and not show your current situation. The lender won’t use them to identify suitable mortgage rates and terms for your needs.
Some of the documents you should have include proof that the down payment isn’t a gift from someone else, business credit scores, personal credit history, documents showing recent revenue, and proof of ownership of the business. A broker can help you get the updated versions of all the necessary documents to make it easier for the lenders to approve you.
...pick the one thats right for you.
Speak to one of our qualified mortgage experts that will guide you in the right direction. Usually as a self-employed person when you go to the bank to obtain a mortgage, you have to go out of your way and take extensive measures by: improving your credit score, offering a huge down payment, showing history of work, savings accounts and providing many other documents. These steps all make sense and are in some way part of the procedure when you want to improve your chances of getting a loan, but we make it much faster and simpler than any bank out there.
At CMB we will personalize your mortgage, whether it is for refinancing, buying or transferring to achieve the best results possible.
You have worked hard to achieve success in your field of work so you should be entitled to a great mortgage as well! We appreciate the value of hard work so please contact us to book a free consultation.
You can use the income from your regular employment job or the profits you make from a business or company. Traditional lenders often consider your net income from your tax returns. This is the amount that is left after all the allowable deductions. Since the self-employed category has many exemptions, the net income is usually lower. On the other hand, private lenders will consider the gross income. They will add all the money you generate in a year, including those from side businesses and all the exempted fees. The mortgage lenders will only consider the income for the previous two years and not the entire period you have been employed or in business.
Yes, you can get a mortgage to purchase a house as a first-time buyer or a second-time buyer. You can even get a pre-approved mortgage. All you need is the right broker to help you navigate the complex lending rules. Our brokers will introduce you to the right private lenders to get you the loan since most banks fear lending self-employed people. You can still try applying at your bank, but if turned down, our mortgage brokers will be here for you. You’ll have to meet other conditions such as paying a down payment and closing costs, but you’ll the mortgage for a house.
If you already have a property, you can get a mortgage worth up to 90% of the property value. Several other factors such as your income, your credit score, and the down payment you can afford can also determine the size of mortgage you get. If you can prove that you generate more income, you will have a chance of getting a larger mortgage. Similarly, if you have a very good or excellent credit score, your lender will get you the amount of mortgage you need. If you don’t have a property, you don’t want CMCH insurance, and you have enough down payment, you can qualify for up to 80% of the purchase price.
You can show proof of income for the self-employed through your annual tax returns. As a business owner, you are allowed to remove some of the expenses in the tax return, but that will get you a low mortgage from banks. Private lenders will overlook the exemptions and calculate the gross income. The tax returns have to be for the past one or two years. You will also need financial statements for your expenses, debts, and income, together with bank statements of any other income revenue you have. Another crucial document you’ll need is an article of corporation or a business license. These will be sufficient to prove that you own the business and you generate the income you have.
Certified Mortgage Brokers are available to help you find the relevant documents you need. We understand that having enough proof can help with interest rate negotiations, and we will help you get the best.
Yes. All self-employed people can apply for mortgage refinancing, second mortgages, or third mortgages. The type of mortgage you want will determine the lender you approach and depend on the mortgage programs they offer. You can use the second mortgage for any purpose, including debt consolidation and investments. The debt consolidation will make the mortgage payment easier. You can also use your home equity to get a second mortgage. Our mortgage brokers can help you understand how mortgage refinancing works and help you calculate the amount of the second mortgage you can qualify for. We will also help you determine the payments you can afford comfortably.
Most lenders, especially the traditional ones, tend to pay more attention to how stable your income is instead of the amount of savings you have in your account. As such, having a stable job is a crucial factor when applying for a mortgage. You can get a mortgage from a contract so long as it’s a long one that is in line with the mortgage amortization, which in most cases is two years. A lender may ask for an employment letter from your employer to confirm your job stability. The point will be to ensure that you will make payments comfortably during the loan agreement term.
Getting a private mortgage was not easy to be honest, but at least with Mr. Leon it was doable. Thank you for your help!
There are a lot of mortgage brokers in toronto to choose from, I was a bit intimidated by that. Don't regret I picked CMB, they took the lead and made sure to cover all the bases
I was renting an apartment for a long time and finally decided to take a big step - get a mortgage instead. Team at certified Mortgage Brokers laid out various options for me. The actual process went smooth and quick, happy with my new home.
My wife and I decided to refinance our mortgage and started looking for a mortgage broker in Toronto. There were so many options, so you can imagine how overwhelmed we got! After talking to Leon we decided to proceed with Certified, didn't regret that decision once. They always gave useful recommendations, were attentive, and constantly in touch. And most importantly (for us) they helped us to save some money!!
Vita was great. Helped my son with all the paperwork and got him very good interest rate. On the closing date called to follow up if everything went fine. Quite a pleasant experience. I would recommend this firm for anyone who is looking a mortgage broker.
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