Self Employed Mortgage for Business Owners or Self-Employed

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    Despite these shortcomings, it is possible to qualify for a self-employed mortgage designed specifically for business owners and self-employed.

    Are you a business owner or self-employed finding it difficult to arrange for a competitively priced self-employed mortgage for your home? Apply today for a self-employed mortgage with Square Capital and get approved.

    Bank Records of Stated Income

    As the reported net income on the tax return is lower than the stated income, some lenders might consider if you can provide bank statements containing the income received from your clients as a business or self-employed. It is also important to have a consistent flow of income on a monthly basis to improve the chances of being approved for a self-employed mortgage.

    Save for a Bigger Down Payment

    Lenders do their due diligence to ensure that the self-employed mortgage they lend is secured. If you contribute a bigger down payment towards your home, the lender will see you as a low-risk borrower. The bigger the down payment you have at the beginning of the self-employed mortgage, the more equity you have in your home and the less likely you are to abandon during a financial crisis. Having a bigger down payment also has the advantage of having a more affordable monthly mortgage payment.

    Payoff Debt

    The chances of getting approved for a self-employed mortgage are higher if you have minimal if not no debt at all. Lenders will consider a self-employed applicant with no debt as a low-risk borrower as it will be easier for the borrower to make monthly self-employed mortgage payments. 

    Improve Your Credit Score

    Your credit score plays a crucial role when it comes to applying for a self-employed mortgage. Having a higher credit score also increases your chances of qualifying for better interest rates as your application will be more attractive to a lender. Some of the ways you can increase your credit score include:

    • pay off credit card debts
    • making minimum payments and bills on time
    • not surpassing the credit limit
    • ensuring that debts do not go to collections
    • do not apply for credit often

    Record of Business or Self Employment

    Maintaining a strong track record of your business or self-employment helps your business practice as well as becomes valuable while applying for a self-employed mortgage. In order to prove the success of your business or self-employment, it is important to show that your income is consistent. Having a minimum of 2 years of records will increase your chances of approval for a self-employed mortgage. 

    Last 2 Years of Tax Records

    Most self-employed mortgage lenders will ask for the last 2 years of tax return assessments along with other documents.

    Contact us today to get approved for a self-employed mortgage.

    It is beneficial to provide documentation that you have been in business for or self-employed for at least two years, and show two years’ worth of sound financial and credit management. Other documents a lender might require to process a self-employed mortgage include:

    • Business license or article of incorporation
    • Proof of principal ownership in the business
    • Financial statements for the business
    • Notice of Assessment, T4, and T1 General for the last 2 years to confirm of your self-employed status
    • Bank statements for the last 6 months to help prove stated income
    • Agreements or contracts showing future/past income
    • Proof of taxes paid
    • Proof of down payment
    • Personal credit scores
    • Personal identification
    • Property details including property tax statement

    Contact us today for a free Self-Employed Mortgage consultation. 

    Down Payment and Refinance Options

    With good credit history and enough business income available, you can also refinance your house to access additional money to expand your business or meet other needs. You may be able to finance up to 80% of the appraised value of your home when refinancing using a self-employed mortgage.

    Contact us today to determine your eligibility for a Self Employed Mortgage.

    Self Employed Mortgage Alternatives

    Square Capital Management Inc. has experts who can meet the needs of borrowers taking into account their financial wellbeing in the long run. Contact Square Capital today for a free consultation, to determine your eligibility, and to apply for a private self-employed mortgage. For more information, visit our Private Mortgages page.

    Pros and Cons of a Self Employed Mortgage

    Disadvantages of a Self Employed Mortgage

    Higher Cost of Borrowing

    Due to the challenges involved in proving the income if you are a business owner or self-employed, lenders charge a higher interest rate and additional fees to approve a self-employed mortgage.

    Difficulty Involved in Proper Documentation

    It takes effort to organize documentation and maintain financial records. You might even have to hire a professional accountant to help you manage your finances.

    Chances of Rejection

    If the application is rejected for various reasons, it might impact your credit score and decreases your chances of applying for a self-employed mortgage in the near future when your circumstances improve

    Chances of Default

    Due to the likelihood of income fluctuations as a business owner or self-employed, you might find it difficult to make repayments on a self-employed mortgage if your business does not go as planned or lose your contract as self-employed.

    Despite the risks involved in borrowing a self-employed mortgage, with proper financial planning and discipline, buying a home can be a sound investment with a self-employed mortgage in the long run. The discipline of maintaining proper documentation and money management is always a must for a business owner and a self-employed individual regardless of whether they apply for a self-employed mortgage.

    Start Your Self Employed Mortgage Pre-Approval

    References

    1) May 2019, Study: Self Employed Canadians: Who and Why?, Statistics Canada, https://www150.statcan.gc.ca/n1/pub/71-222-x/71-222-x2019002-eng.htm

    Are you ready to get your mortgage?

    Contact us today to get a free quote. We will help you understand the current market conditions affecting the mortgage market! Prequalify without affecting your credit!