Overview

Talking about mortgages hasn’t always been easy, especially if you’re self-employed, as reducing the taxable income makes it challenging for you to qualify for the mortgage you desire. We at Mortgage Intelligence understand that business owners as we’re business as well!

We have an exemplary number of institutions and private lenders that offer excellent mortgage plans for self-employed Canadians. These Canadian lenders understand that self-employed people have significant tax write-offs, resulting in considerable reductions in their declared income. You don’t need to prove your income with these lenders, and a realistic estimate of your annual income will suffice.

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What is a Self-Employed Mortgage?

A self-employed mortgage is a commercial or residential mortgage on a commercial or home property owned or purchased by someone who is self-employed or owns their own business or organization. Because self-employed Canadians declare their earnings differently than salaried employees who work full-time or part-time, their claimed net income is not necessarily sufficient to qualify for a standard mortgage from a Canadian bank.

In today’s world, an increasing number of Canadians are quitting their 9 to 5 jobs, breaking free from corporate shackles, and creating their enterprises to enjoy and benefit from the numerous advantages that result from working for themselves. Flexible work hours, the infinite potential for advancement, the ability to deduct business expenditures, no company politics to deal with, and, most significantly, tax benefits and rewards are just a few of the perks and benefits available. At the heart of this change are major cities such as Toronto, Ottawa, Mississauga, Oshawa, Oakville, Brampton, and other rapidly rising areas of Ontario.

Most people are aware that self-employed workers benefit from favorable tax status, saving them thousands of dollars in annual income taxes. People who run their own business can save a lot of money thanks to various legal tax write-offs for company-related expenses such as corporate education, business lunches, transportation expenses, and more. A lot of people want to establish their own enterprise because of the savings they can make. It’s one of the most captivating reasons for taking this step.

Despite the seemingly infinite benefits and incentives, most self-employed Canadians run into one problem again and time again. Mortgage financing for a self-employed individual through major Canadian banks may be a very stressful procedure, especially given recent changes to mortgage rules. Even though the borrower’s personal and business accounts are all at the same bank, they are frequently rejected. This is at the heart of consumers’ rising dissatisfaction with Canada’s current banking system. This explains why many Canadians are dissatisfied with their banks today, owing to the lengthy and frequently flawed application procedure.

Being accepted for a mortgage as a self-employed in Canada requires a common-sense approach. Thankfully, Mortgage Intelligence has a team of professional mortgage brokers and agents ready to assist you in reserving and securing a mortgage without having to pay a large tax payment to Revenue Canada.

How to Get a Mortgage When Self-Employed? 

While applying for a mortgage as a W-2 employee may be easier than acquiring one as a self-employed individual, you don’t have to return to your cubicle to do it. Some lenders may be afraid that you won’t be able to make your monthly payments consistently, while others may simply not want to deal with the additional paperwork that comes with lending to a self-employed person.

Don’t fret! If you’re self-employed, there are things you can take to improve your chances of getting a loan.

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Be an Attractive Candidate for a Self-employed Mortgage

Borrowers who are confident in their ability to pay can undertake any or all of the following to increase their chances of getting a loan.

  • Establish a Proven Track Record of Being Self-employed

    Lenders will be more ready to take a chance on you if you can demonstrate that you know how to win at self-employment. You must have at least two years of working experience as a self-employed. The longer the period, the better, as it demonstrates that your revenue is consistent.

  • Maximize Your Credit Score

    The higher the credit score that a borrower makes, the more it is appealing to obtain a loan and qualify for cheaper interest rates in any type of borrowing circumstance.

  • Offer a Large Amount of Down Payment

    The bigger the equity in a home, the less probable it is that a borrower will default on the loan during a financial crisis. If a borrower invests a large sum of money in the purchase up front, the bank will consider the borrower less dangerous.

  • Have Substantial Cash Reserves

    In addition to a high down payment, having a significant emergency reserve informs lenders that the borrower will make monthly payments even if the firm suffers a setback.

  • Pay All Consumer Debts

    It will be easier to meet your mortgage payments if you have fewer monthly debt payments entering the mortgage procedure. You may even qualify for a greater loan amount if you pay off your credit cards and automobile loans because you’ll have more cash flow.

  • Provide Necessary Documentation

    Having the willingness and ability to fully record your income through past years’ balance sheets, profit and loss statements, tax returns, and other financial documents will improve your chances of qualifying for a loan.

The Bottomline

In the absence of unemployment insurance payments, a W-2 employee’s income will plummet to zero in a blink of an eye if they lose their job. Self-employed people frequently have several clients and are unlikely to lose all of them at once, providing them with more job security than is often assumed.

Self-employed people are used to working extra hours to complete more tax forms, obtain company permits, find new clients, and keep their businesses going. They can also find ways to qualify for a mortgage with a little research and perseverance.

Do you want to know more about mortgages for the self-employed residing in Canada? Feel free to reach us out and we’ll be glad to help you out. We serve clients in Toronto, North York, Scarborough, Pickering, Oshawa, Ajax, Whitby, Etobicoke, Thornhill, Richmond Hill, Markham, Stouffville, Uxbridge, Vaughan, Concord, Woodbridge, Mississauga, Oakville, King City, Caledon, Nobleton, Milton, Aurora, Newmarket, East Gwillimbury, Keswick, Bradford, New Tecumseth, Georgina, Innisville, Guelph, Barrie, Ottawa, Orangeville, Collingwood, Kitchener, Hamilton, Cambridge, Waterloo, St. Catharines, Niagara Falls, London, Peterborough, and Ontario.

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