Do you dream of building your own business? Does the idea of being your own boss and working on your own time appeal to you? Imagine yourself finally breaking free from the confines of a traditional 9-to-5 job. The best part is if your business succeeds, you will be able to earn far more than you would if you were working for someone else.
You’re not alone in this dream. More Canadians are aspiring to leave their traditional professions and embark on their entrepreneurial path. In fact, self-employment now accounts for 15% of Canada’s workforce.
Although self-employment has a lot of perks, it also has its fair share of disadvantages, particularly when applying for mortgage loans as a first-time home buyer in Ottawa. If you’re a self-employed professional or entrepreneur, you may wonder how the mortgage application works for you—especially the part where you have to submit financial documents.
Approval for self-employed mortgages isn’t impossible, but it is more complicated than for those with regular employment.
Look at why being self-employed may make your mortgage application more difficult and how to deal with this concern by reading the article.
Proof of Income
When applying for a mortgage, you need to submit proof of income. And unlike employees who receive a consistent salary each month of each year, self-employed people manage their wages themselves. Moreover, it might take years for a start-up to break even. For improved traction, you may need to invest some of your own revenue back into your firm. This makes it difficult for a potential lender to have faith that you can keep up with monthly payments.
One of the benefits of owning a business is the ability to deduct costs from your taxable income. However, the disadvantage is that it is counterproductive to your mortgage application. It makes your lender question if you’re generating enough money for your loan.
It’s a simple process to supply documents when applying for a standard mortgage as a regular employee. Your credit score, certification of employment, pay stubs, and a few other documents may be sufficient.
But when you’re self-employed, you’ll need to go through a different set of documents to prove to the lender that you’re capable of paying off the loan. Some of these additional documents may include:
- Personal tax returns for the last two years
- Notices of Assessments for the past two years
- Up to a year’s worth of bank statements to justify income if specified
Consult With a Reputable Mortgage Advisor
While you’re busy running your company, your mortgage advisor is your best chance for getting the mortgage situation to work in your favour. As a self-employed individual, you must report both your personal and business financial status. Hire a reputable agent specialising in dealing with company owners to expedite the process and get approved for a mortgage loan.
Applying for self-employed mortgage services in Ottawa may require additional paperwork, so allow your mortgage agent to guide you through the process.
When applying for a mortgage as a self-employed individual, know that you can get support from a professional. You’ll encounter a new set of challenges, but if you’re prepared and follow professional advice, you’ll be approved for a mortgage loan in no time.
Ottawa Mortgage Services provide mortgage agent services for first-time homebuyers in Ottawa, including self-employed individuals and commercial clients. We also help with mortgage refinancing, pre-approvals, and debt consolidation. Get in touch with our experts today!