The rate of self-employed Canadians is growing at a rapid pace, and as a result, the challenge of getting a mortgage for self-employed individuals is rising too.This is because income can be less predictable, unlike working with a steady employer.
Additionally, some banks won’t recognize those who are self-employed or own a business because of an unclear history of steady earnings and tax filings. With that being said, getting a secure mortgage as a self-employed individual can be difficult. However, don’t feel disheartened because it’s not impossible.
For this reason, many people will seek professional mortgage services to ensure they follow the right steps, and that will help them find the best deals based on their financial health.
If you’re thinking of getting a mortgage, but you’re self-employed, don’t fret. Below are some options that can help you apply for a mortgage. Let’s take a look!
What Documents Do I Need to Present?
When you’re applying for a mortgage, the documents you need to present may vary slightly. And with any application, you must provide all the necessary documents to help strengthen your application.
Most of the time, self-employed individuals will need to show proof of income in order to obtain regular mortgage rates and products. However, some people may not provide evidence of income, so instead, they need to prove a strong credit history.
Here are some documents that self-employed individuals need to get a mortgage:
- Proof that your GST/HST is paid in full;
- Notices of Assessments;
- Contracts that provide proof of revenue and past revenue for the past few years;
- Business and personal credit scores;
- Proof of principal owner of a business;
- Business license;
- Proof that your down payment was not gifted;
What Factors Can Increase My Chances for Mortgage Approval?
1. Credit Score
When applying for a mortgage, your credit score plays a vital role in approval. When you pay off your credit card debt, don’t surpass your credit limit, consistently pay off bills, and ensure debts don’t go to collections in order to increase your credit score.
When you have a high credit score, you will look more attractive to a lender, allowing you to qualify for lower interest rates.
2. Down Payment
When you have more equity in your home, you are less likely to become delinquent when going through financial hardships. Putting down a hefty down payment for your home will make the bank see you as less risky. Additionally, a bigger down payment may also give you lower, more affordable monthly mortgage payments.
For this reason, it’s best to seek mortgage advice to ensure that you’re getting the best deals and that you can negotiate a better rate for both your downpayment and monthly mortgage payments.
3. Present Self-Employment History and Records
Having accurate records of your self-employment will give you a strong and effective track record. This way, banks will most likely lend to you after seeing that your self-employment is a success.
With that being said, ensure that you have at least two years of self-employment history before applying for a mortgage. Also make sure to keep an eye on interest rates because when it’s low, it’s worth applying for a mortgage, even if you don’t have all your self-employment history documented.
The Bottom Line: Getting a Mortgage When Self-Employed Is a Different Ball Game
Although getting a mortgage can be difficult for some self-employed individuals, know that it’s still possible, especially when you prepare yourself financially, get your documents ready, and seek out mortgage advice to help you secure the best mortgage deal.
Seeing as mortgages are huge financial commitments, it’s best to ensure that, as a self-employed individual, you get to keep your finances in check and ensure steady cash flow to avoid any obstacles along the way.
How Can Ottawa Mortgage Service Help You?
Are You looking for mortgage services in Ottawa? If so, you’ve come to the right place.
I am Ghummaz Bhatti, and I offer a wide variety of mortgage related services that can help you land the perfect mortgage loan. I help first-time homebuyers, assist in pre-approval letters, provide support to self-employed individuals, refinancing, and more.
Get a free assessment today!
