There are more and more self-employed people entering the Canadian market in recent years. The numbers have risen by over one million from 2001. Self-employment also means precarious earnings for many. With lack of steady income, it becomes harder for them to invest in a home. They are among the first to be refused by lenders, especially if they are low paid. However, that doesn’t mean that all doors to a decent mortgage are closed. If you can show reliable records of dependable earnings, you can still be qualified. You just need to prove to the lender that your earnings are sustainable.
Long Established Business: It is easier for lenders to trust you if you have been working for a longer period. If you have been working for less than a couple of years, your case might be a tougher one, but if you have been self-employed for two years or over, it becomes easier for lenders to trust your ability. Situations also vary according to the business structure. Conditions are different for sole traders, contractors, partners, and company directors.
Lenders might urge you to seek the assistance of a certified chartered accountant who has checked your income report to the tax authorities, but you may face a roadblock there. Accountants try to bring down taxes for the self-employed but low taxes might not qualify you for a mortgage. Of course, situations differ case by case. If you have a history of employment before switching to contracting, you may be considered. If you have a record of stable earnings, things might be easier, depending on the amount.
Charges are high for a one-year self-employment record. For two years, you may be asked to pay an interest rate of 2.59% or higher even if you put in a 25% deposit.
We can dispel your fears and help you own a home at the lowest available interest rates. Call us to find out how.