Self Employed Mortgage Blueprint
Navigating Self Employed Mortgages
Navigating self-employed mortgages can be challenging. Self-employed people do not fit into a standard box like a traditional employee.
Self-employed mortgages require a more detailed approach. Preparation before your mortgage application will make lender approval more attainable. Things like detailed proof of income, profit-and-loss balance sheets, tax planning, and bank statements are all required for lender approval. If you own your own business, do freelancing, contract work, or have a professional practice, then you are self-employed.
Preparing Your Application
Having your financials organized is important when you are applying for a self-employed mortgage. Keeping your personal bank records separate from your business bank records will help a mortgage agent and lender see a clearer picture of your income.
Strong credit and a larger down payment are necessary when you are self-employed because it will strengthen your application and give credibility for your monthly mortgage payments. Even though you could purchase a home with a 5% down payment, it is advisable to save 20% because you eliminate mortgage insurance fees and have a better chance of approval from alternative lenders.
Work with your accountant to minimize write-offs. High business deductions lower your taxable income and reduce your borrowing power.
Address any personal and corporate baci taxes before submission.
Key Documents Needed for Self Employed Mortgages
- Two most recent years of filed T1 General tax returns
- Two most recent years of Notices of Assessment (NOA)
- Business license, article of incorporation, or business registration documents
- Two years of business financial statements if you are incorporated
- 12 months of bank statement.
Smart Strategy ~ Working with a Mortgage Agent
You do not have to fit into a standard box with the bank to buy a home. Working with an Ontario Mortgage Agent will give you access to a wide variety of products with different lenders.
- Stated Income Programs: Mortgage agents have access to lenders that will look at gross business revenue instead of net personal income.
- Alternative Lending: Mortgage agents have access to alternative B lending companies like credit unions that offer flexible criteria for business owners.
- Customized Income Add-Backs: Mortgage agents have the ability to add back business expenses like depreciation to boost your qualifying income. We also work with lenders that use a certain percentage of your corporate assets to increase your qualifying income.
- Private Lending Options: Great option for short-term capital if your business is brand new.
As an Ontario Mortgage Agent with 35 years of personal entrepreneurial experience, I understand exactly what it takes to build a business from the ground up. I also understand how frustrating it is when traditional banks don’t “see you” and your hustle. I speak your language, and I understand balance sheets to find hidden borrowing power. This experience also gives me the ability to be creative in presenting your true financial strength to lenders.
You’ve already done the grit and grind; now let me do the heavy lifting to secure your mortgage for your lifestyle.
