Monthly Archives: October 2021

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. 

Additional Paperwork 

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.

Conclusion 

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! 

Debt consolidation loans are there for when you’re experiencing financial difficulty. It’s an easy fix for a debt problem that has piled up, and it’s also ideal for when you want to lower your interest rates and combine all debt into one monthly repayment. 

While it seems like a good idea for most people, getting approved for a debt consolidation loan is not easy. Here are five reasons why people get declined for debt consolidation applications:

You Don’t Have Enough Income to Get Approved

A debt loan payment commonly costs more monthly compared to the minimum payments for credit cards. So, once you realize you’ll benefit more from a consolidation loan, you might only be able to make minimum credit card payments and not another dollar more.

Credit card minimum payments are usually so low that it can take up to decades for you to pay off your balance fully. Moreover, that’s only if you stopped using the credit card to pay for expenses.

Consolidation loans cannot be paid off over a long period unless secured by your home. They’re usually amortized over three to five years, meaning that payments need to be high enough to pay off the loan within that period. If your income cannot handle that much payment, you’ll likely get declined.

There’s a Problem with Your Credit Report and Score

Many credit report and credit score issues prevent people from getting approved for a debt consolidation loan. For instance, late debt payments or debts in collections can damage your credit score. 

High balances owing can also contribute to the issue of getting approved. Since there are so many variables in a debt consolidation loan, you should instead read a detailed explanation of how credit scores are calculated.

You Can’t Present Enough Security or Collateral

Financial institutions generally ask for security or collateral as you apply for a debt consolidation loan. That is especially important if you’re someone who’s having a hard time managing all your payments. These institutions only want to make sure that you can make repayments for the amount they’ll lend you.

When you don’t have anything to offer as collateral, you might think about using a credit card to pay off your other debts at a high interest rate instead. Meanwhile, other people apply for an unsecured loan from a finance company at sky-high rates, sometimes as high as 30 percent.

So, if your goal is to reduce debt, then these choices don’t offer a viable alternative. That is because a large portion of your debt payment will end up on the interest rate, and not on principle. 

Conclusion

Applying for a debt consolidation loan, much like any other loan, involves a lot of factors. If you cannot meet most requirements, you’ll likely get declined. Financial institutions want to make sure that lending you money is worth it on their part, so if they’re not convinced that you can meet monthly repayments for the loan you’re getting, they won’t approve your application. 

Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, and commercial clients. We also help those applying for refinancing, pre-approvals, and debt consolidation loans. So if you’re looking for the best debt consolidation loans in Ottawa, ON, apply with us today! 

You have heard of the adage “cash is king,” and you may agree on this, but how do you think it applies when it comes to buying a house? This may be something that you haven’t thought about before, but it’s certainly worth considering. And in this post, Ottawa Mortgage Services will tell you why: 

The Obvious Reason

When you are ready to pay cash for the house, you have the edge over other interested buyers because the seller will be motivated to close the deal with you. This can be helpful, especially if several bidders are competing for the house you like.

That said, you should know that while paying cash for a home makes sense for many people in specific real estate markets, it might not be the best option for some. This downside includes getting a huge chunk of your investment capital tied up with a single asset class. It also means you’re sacrificing liquidity. 

The Process of Purchasing a Property with Cash

The first step in purchasing a property all in cash is raising the amount that you need. Unless you already have the money ready in your bank, you’ll likely have to liquidate other assets and have the proceeds deposited into your bank account. 

The seller might ask for proof that you do have the cash, like a bank statement. After that, the process is pretty much the same as how it is when you buy a home with a mortgage, except that there won’t be a mortgage lender in the picture. 

Pros of Paying All Cash for a Property

You’ll Be a More Attractive Buyer

As mentioned earlier, sellers are more interested in buyers who don’t need to apply for a mortgage to make the purchase. You are likely to be taken more seriously when you can prove that you can buy their house in cash. 

You’re Likely to Get a Better Deal

Because you’re more appealing to sellers, you are in a better position to get yourself an excellent deal. This is especially the case if the seller needs to sell the house fast. 

You Won’t Have to Worry About Applying for a Mortgage (and Paying for It)

A mortgage application requires a lot of documents – from proof of income to records of credit history. The process can be tedious, especially if you don’t have those documents ready. There are mortgage companies that are not too strict with the approval process, but they’re still going to request the necessary documentation from you.  

If you pay for the house in cash, you won’t have to worry about monthly payments for many years either. 

Cons of Paying All Cash for a New Property

You’ll Tie Up All Your Money in One Asset Class

If the amount needed for the new house equates to most of your savings, then you’d be breaking one of the rules of smart personal finance, which is diversification. Also, the ROI of residential real estate lags behind stocks and other types of assets. 

You’ll Lose the Financial Leverage You Can Get From a Mortgage

When you buy a property using borrowed money, the potential return is higher. That is assuming the property increases in value over time. Note that this could go the other way, too, if your home’s value declines. Of course, that may not matter if you’re planning to live in the house anyway. 

You’ll Give Up Liquidity

Liquidity refers to how fast you can turn your investment into cash if you need to. One example would be your savings in the bank, which you can get in cash almost instantly. Brokerage and mutual funds could take longer, but they can still be turned into cash when needed. A home, on the other hand, can take months to even years to sell. 

Conclusion

We want to impart with you in this post that the idea of paying for your next home all in cash should be approached with consideration. There are pros and cons to it, and depending on your particular situation, it could be the right solution for you or not. You need to weigh things carefully. You should also speak to a reputable company that offers excellent mortgage services to know if there are more desirable options than paying for a home in cash. 

Ottawa Mortgage Services can answer all your questions about mortgages and provide help with pre-approval, refinancing, and more. Contact us today to know more about our expert mortgage services!