Securing A Mortgage As Self Employed
The number of self-employed individuals in Canada has surged significantly. Many Canadians are moving away from conventional employment and opting for alternative income-generating methods. Statistics reveal that over 600,000 Canadians shift to self-employment each year, and this trend continues to grow.
Does This Sound Familiar?
The concept of being self-employed encompasses a variety of definitions, each unique in its own right. Some self-employed individuals run their businesses, while others pursue professional careers as IT Contractors or Doctors. There are also commissioned workers, freelancers, farmers, and property owners among the self-employed. Despite these diverse classifications, all fall under the umbrella of self-employment, yet they function with distinct business structures.
Do Lenders Treat All Self-Employed Individuals Equally When Approving Loans?
Self-employed individuals can be categorized into various groups, including commission sales agents, corporate owners, sole proprietors, and partners. Those who own incorporated businesses typically pay themselves a salary, which allows them to meet similar qualifications as traditional employees. Therefore, unincorporated companies and sole proprietorships could greatly benefit from incorporating to secure a mortgage, especially when applying for mortgage insurance. Regarding mortgage applications, lenders assess the gross income of self-employed or commission-based workers differently from that of salaried employees. Some lenders focus on net income instead of gross income for self-employed individuals. The Canadian Mortgage and Housing Corporation restricts lenders to reviewing only the last three years of income. Specific lenders may consider 80% of gross earnings and the average income from the previous year's tax returns for commission-based workers. Additionally, some lenders might allow self-employed applicants to add specific tax deductions (like vehicle expenses, home office costs, and capital cost allowances) back into their income calculations. Other lenders may include a percentage of these business expenses to enhance the reported income. If self-employed applicants anticipate difficulties in securing a mortgage, they can enlist a salaried employee as a co-signer. However, it’s important to note that the co-signer will also be listed on the property title, making choosing someone trustworthy for this role crucial.
Securing a Self-Employed Mortgage with Black Knight Capital: One of Our Top Priorities
While the journey to home ownership may present more hurdles for self-employed Canadians, it is certainly achievable. With proper preparation and expert guidance from a mortgage broker, you can make your dream of owning a home a reality. Black Knight Capital is dedicated to assisting self-employed borrowers through the often complex mortgage application process.
Whether you are a business owner facing challenges in getting approved or a commission-based employee unsure of where to begin, our knowledgeable and experienced mortgage brokers at Black Knight are ready to assist you! Our dedicated team will help you devise an effective plan and ensure you secure the best mortgage rates and terms available.
Contact us by calling or texting 416-779-0415 or emailing us directly at bkcapmortage@gmail.com to connect with a licensed mortgage broker who will guide you through every step. Allow us to handle the complexities of the mortgage application process so you can focus on purchasing your dream property with complete peace of mind.
