Mortgages for the self-employed
For those in business for themselves, every day is met with a new challenge. Applying for a mortgage shouldn't be one of them.
One of the steps in applying for a mortgage is proving income to your lender. In the case of salaried workers, providing a recent T4 slip is often enough. But what about those who are self-employed, or rely on gratuity as part of their salary? This income contributes to their ability to afford a mortgage, yet doesn't appear on government forms. This article from the Globe and Mail shows that although the application process may be slightly different for the self-employed, it doesn't have to be stressful.
When a lender is approached by a self-employed individual and cannot rely on what is referred to as verified income, they instead must work with stated income, which can be proven with tax returns, notices of assessment, contracts from the business or financial statements. The strength of the business must be assessed by the lender, as the business is what will supply the applicant's income in the future. This will determine the applicant's ability to afford the mortgage in the upcoming years. Some other examples of information that may be required: proof that GST or HST payments are up to date, business contracts to show expected revenue, personal and business credit scores, and proof of assets owned by the business.
An easy way to make the application process smoother is to consult an Ottawa Mortgage Broker, who will get to know the client, their business and find out exactly which documents are needed to proceed. They will handle negotiations with the lender and find not only the best rate, but the most favourable terms.