Self-employed? Mortgages are easier than ever
March 13, 2009
More Canadians than ever before — almost 20% of workers, according to Statistics Canada, are now in the category of self-employed. Until recently, it could be difficult to obtain a mortgage unless you were on a company payroll. Now lenders and mortgage insurers are responding to the unique needs of the self-employed, resulting in more options than ever before. You may be surprised to learn how easy it can be to obtain a mortgage for a primary residence, as a self-employed person. You will also discover that you have the choice of most options in the marketplace, with terms of up to 35 years, fixed- and variable-rate mortgages, and even high-ratio, insured mortgages.
What’s changed: income statements. Most notably in recent years, many lenders have loosened their documentation requirements for stating self-employed income. While qualifications vary, most mortgage products currently on the market have only few minimum requirements:
• You have been self-employed in the same line of work for at least two years. Proof required: Business license or articles of incorporation; income tax returns; statement of business activities; or financial statements.
• You have a good personal credit history. Proof required: A standard credit check.
• You have no tax arrears outstanding. Proof required: A recent Canada Revenue Agency Notice of Assessment.
As well, some lenders require that the property you’re buying meet certain conditions, and most will need a property appraisal to confirm value.
A Canadian Accredited Mortgage Professional (AMP), has access to the widest range of lenders that offer financing solutions for the self-employed. An AMP can review your needs to find exactly the financing for you, for your current priorities and goals.
Weigh your priorities when choosing your mortgage
Whether it’s your first-ever mortgage or one of many renewals, there are plenty of options available. Here’s a quick face-off of what the basic choices give you:
Conventional: More savings for you plus improved cash flow from not having to purchase mortgage default insurance (CMHC requirement).
High-ratio: Ability to either enter the market sooner or to free up cash for large expenditures.
Fixed Rate: Protection from rising interest rates, plus the knowledge of how much principal you’re paying off each month.
Variable Rate: A lower interest rate, plus the potential to chip away even more from the principal, if rates fall.
Closed: A lower interest rate than a comparable open mortgage, in return for locking in until end of the term. Also offers prepayment privileges.
Open: The flexibility of being able to pay off as much of your mortgage as you like — even all of it — whenever you choose.
An Accredited Mortgage Professional (AMP) can review the buying process with you from start to finish, to your best convenience. They offer unbiased professional advice with your best interest in mind. An AMP meets stringent requirements and is bound by the strict Code of Ethics of the Canadian Association of Accredited Mortgage Professionals (CAAMP).
When it comes to finding your best financing solution, and accessing your best options, call your Accredited Mortgage Professional (AMP).
Michele Ellis BA, AMP
Accredited Mortgage Professional