Are you a self-employed individual who is seeking for a mortgage? In the traditional market, it was very easy for self-employed people to access mortgages. However, in the past few years, the Canadian Mortgage markets have changed the rules governing the mortgage lending to self-employed individuals.
Different terms and conditions are applied to self-employed people compared to the salaried employees. Financial lenders categorize a self-employed person as one who operates a sole proprietor, partnership or a corporation works on short contracts for different employers, pockets at least 25% of their income from the business or receive payments purely on commission.
The Federal Department of Finance in Canada has reviewed the rules governing the mortgagees for all the borrowers. From the year 2011, every borrower was entitled to a reduced maximum amortization period of 30yrs. There were amendments indicating the maximum allowed percentages that borrowers can refinance. If you have less than 20% down payment, the new regulations require that you must meet standards for a five-year fixed rate mortgage.
Self-employed people are also needed to have a minimum down payment of 35% of the home price when applying for a mortgage or refinancing from any federally-regulated financial institutions. Your mortgage should also be insured by either the Canada Mortgage and Housing, Canada Guaranty Mortgage Insurance or the Genworth.
In case you cannot afford to make 35% down payment to a financial institution, you can still have access to an affordable mortgage from lenders other than banks such as ‘B-lenders’ and Credit Unions. The best way to access these is through a mortgage broker that has the flexibility and access to these lender pools. These lenders are regulated differently, and you can get a mortgage from them with as little as 20% down-payments, and there is no mortgage insurance needed.
To qualify for a self-employed mortgage, you will be required to provide prove that you run a viable business. Also, you should have a good credit rating score that describes your loan repayment history with other lenders. If you have been in business for more than three years, you will be required to provide proof of your net taxable income. Having audited financial statements helps a lot. Many lenders will require 2 years of history, but this varies depending on who you’re working with.
For self-employed people, getting a mortgage in Canada is very easy if you observe the above tips and have the right evidence. Always seek for a reliable mortgage broker who will help you select the best alternative in the market that will work best for you.
Learn more about self-employed people and mortgages by contacting PrestoMortgages brokers in Ontario Canada.