Self-Employed Mortgage
A self-employed mortgage is when you apply for a residential or commercial mortgage with the income that you make through your business or corporation. People in the self-employed world usually write off all the expenses and business-related spending, which result in a lower declared income and makes it harder to qualify for a mortgage with the main Canadian banks.
More and more people in Canada are leaving their 9-5 jobs and entering the world of entrepreneurship. Once you get your business off the ground and become an established business or corporation the benefits of being self-employed are endless. The biggest reward is being your own boss and working for yourself. Being able to choose your own work hours and not being tied down to the rules and policies that exist with corporate office jobs.
Other perks of being self-employed are that you can write off all of your business expenses. The tax advantages are also very rewarding. There are no limits to growing your business.
This is a real shift that trending and more and more people are drawn towards the self-employed world. You can witness this happening in some of the major cities with larger populations like Toronto, GTA, Oshawa, Brampton, Oakville, Barrie, Mississauga, and many other cities in Canada.
Those who are self-employed understand that preferential tax treatment can have an impact on their ability to save tens of thousands of dollars in income taxes every year.
Many types of legal tax deductions exist for business-related expenses, such as corporate education, business lunches, transportation expenses, and more. Business owners can save a lot by working for themselves.
Having the ability to save money through so many different avenues, is why more and more people incorporate themselves and become self-employed.
Corporations may even be able to compound the savings at a lower tax bracket than individual taxpayers. If you haven't already spoken with your accountant, we suggest you do so to learn more about the potential tax advantages of self-employment.
While the benefits of being self-employed can be very rewarding, getting a mortgage can be difficult to obtain and has put many Canadians in tough situations given the new mortgage rules. Going through a major Canadian Bank to obtain a mortgage as a self-employed individual can be very stressful and long application process. Mortgages being rejected by major banks is quite normal and common these days. The single biggest complaint self employed Canadians have is with their Banks. Being a loyal and long-time client of a bank does not account for much these days as more and more self-employed Canadians are getting rejected by the banks due to insufficient income even tho the reality of the story is quite the opposite. The common sense factor just does not exist anymore with larger institutional lenders such as banks.
A mortgage based on stated income is the best option where self-employed income is used. We work with many lenders who do not require a credit check and do not follow the same strict rules as banks for customers with a lower income or even bad credit.
Lenders will accept methods of proving income that an applicant may not have declared properly on his or her tax returns if he or she accepts stated income mortgages. In addition to business contracts with customers, bank statements that show additional cash entering your personal or business bank account, internal financial statements, financial plans, and internal accounting records, you can show other forms of income verification that most banks won't accept. Lenders may even accept a bank account from another country.
Self-employed borrower can use a stated income mortgage to purchase or refinance a home. Second and third mortgages for consolidating debts like high interest credit cards, your children's education or a renovation that your home or business may require. If you carry multiple high-interest debts that can be combined into a single low interest mortgage might be the better option for you.
No matter if you would like to pay off existing debts, or invest in a new property, there are many lenders who can be the solution for you needs and will be happy to fund your application as stated-income applicant. There lenders who can provide you with good rates for variable and fixed mortgages and favorable terms. We will discuss all your options as we even have access to a number of banks who are bending towards accepting stated income mortgage applications. Get in touch with us by phone or email or by filling out our contact form and we will inform you on all the great options available to. Our mortgage brokers at Toronto Private Mortgage will guide on how to apply through a bank or alternative lenders depending on your declared income.
We understand that many business owners and self-employed entrepreneurs do not report their entire income to save on income taxes. While it can be a challenge to get a mortgage approved based on your income while being self-employed, Toronto private mortgage brokers have the experience and relationships with banks and lenders to get your an approval quickly. It might be a longer approval process as banks and alternate lenders have to dive deep into due diligence in order to approve your mortgage, we have all the knowledge it takes to make it happen. The initial process of getting an approval might seem bumpy at first but our promise to you is that smooth is not far away once we get you in the door and being the hunt. “The journey of a thousand miles starts with a single step”. We will be with you every step of the way on this long but rewarding journey.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!
More and more people in Canada are leaving their 9-5 jobs and entering the world of entrepreneurship. Once you get your business off the ground and become an established business or corporation the benefits of being self-employed are endless. The biggest reward is being your own boss and working for yourself. Being able to choose your own work hours and not being tied down to the rules and policies that exist with corporate office jobs.
Other perks of being self-employed are that you can write off all of your business expenses. The tax advantages are also very rewarding. There are no limits to growing your business.
This is a real shift that trending and more and more people are drawn towards the self-employed world. You can witness this happening in some of the major cities with larger populations like Toronto, GTA, Oshawa, Brampton, Oakville, Barrie, Mississauga, and many other cities in Canada.
Those who are self-employed understand that preferential tax treatment can have an impact on their ability to save tens of thousands of dollars in income taxes every year.
Many types of legal tax deductions exist for business-related expenses, such as corporate education, business lunches, transportation expenses, and more. Business owners can save a lot by working for themselves.
Having the ability to save money through so many different avenues, is why more and more people incorporate themselves and become self-employed.
Corporations may even be able to compound the savings at a lower tax bracket than individual taxpayers. If you haven't already spoken with your accountant, we suggest you do so to learn more about the potential tax advantages of self-employment.
While the benefits of being self-employed can be very rewarding, getting a mortgage can be difficult to obtain and has put many Canadians in tough situations given the new mortgage rules. Going through a major Canadian Bank to obtain a mortgage as a self-employed individual can be very stressful and long application process. Mortgages being rejected by major banks is quite normal and common these days. The single biggest complaint self employed Canadians have is with their Banks. Being a loyal and long-time client of a bank does not account for much these days as more and more self-employed Canadians are getting rejected by the banks due to insufficient income even tho the reality of the story is quite the opposite. The common sense factor just does not exist anymore with larger institutional lenders such as banks.
A mortgage based on stated income is the best option where self-employed income is used. We work with many lenders who do not require a credit check and do not follow the same strict rules as banks for customers with a lower income or even bad credit.
Lenders will accept methods of proving income that an applicant may not have declared properly on his or her tax returns if he or she accepts stated income mortgages. In addition to business contracts with customers, bank statements that show additional cash entering your personal or business bank account, internal financial statements, financial plans, and internal accounting records, you can show other forms of income verification that most banks won't accept. Lenders may even accept a bank account from another country.
Self-employed borrower can use a stated income mortgage to purchase or refinance a home. Second and third mortgages for consolidating debts like high interest credit cards, your children's education or a renovation that your home or business may require. If you carry multiple high-interest debts that can be combined into a single low interest mortgage might be the better option for you.
No matter if you would like to pay off existing debts, or invest in a new property, there are many lenders who can be the solution for you needs and will be happy to fund your application as stated-income applicant. There lenders who can provide you with good rates for variable and fixed mortgages and favorable terms. We will discuss all your options as we even have access to a number of banks who are bending towards accepting stated income mortgage applications. Get in touch with us by phone or email or by filling out our contact form and we will inform you on all the great options available to. Our mortgage brokers at Toronto Private Mortgage will guide on how to apply through a bank or alternative lenders depending on your declared income.
We understand that many business owners and self-employed entrepreneurs do not report their entire income to save on income taxes. While it can be a challenge to get a mortgage approved based on your income while being self-employed, Toronto private mortgage brokers have the experience and relationships with banks and lenders to get your an approval quickly. It might be a longer approval process as banks and alternate lenders have to dive deep into due diligence in order to approve your mortgage, we have all the knowledge it takes to make it happen. The initial process of getting an approval might seem bumpy at first but our promise to you is that smooth is not far away once we get you in the door and being the hunt. “The journey of a thousand miles starts with a single step”. We will be with you every step of the way on this long but rewarding journey.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!
How banks calculate self-employed income
Banks and other conventional lenders calculate someone's income based on the average of the income reported on line 150 of the borrower's two most recent tax returns.
Many lenders who accept stated income mortgage applications will consider the average of the last two years' gross income before tax write-offs. Several lenders will consider your other sources of income, including your side jobs, cash income, etc.
When applying for your mortgage, it is best to keep a low debt balance and not overspend on your credit cards.
Keep track of your spending and never spend more than 30% of your credit card limit. That means if you have a Credit card with a $10,000 dollar limit, you should only spend up to $3,000 or less. Utilizing your credit will increase your credit score and will provide lenders with the assurance that you are a responsible borrower.
In Canada, one of the major advantages of being self-employed or owning a corporation is that you can deduct certain business expenses, such as business travel, legal expenses, corporate education, and business meals that accumulate on your personal or corporate credit cards. This is one major advantage of being self-employed which salaried employees cannot access.
A benefit of writing off these expenses is that you can save on your income tax. The drawback is when applying for mortgages or loan through a bank you will be limited by the amount of the mortgage or loan you can qualify for and the interest rate discounts.
Many lenders who accept stated income mortgage applications will consider the average of the last two years' gross income before tax write-offs. Several lenders will consider your other sources of income, including your side jobs, cash income, etc.
When applying for your mortgage, it is best to keep a low debt balance and not overspend on your credit cards.
Keep track of your spending and never spend more than 30% of your credit card limit. That means if you have a Credit card with a $10,000 dollar limit, you should only spend up to $3,000 or less. Utilizing your credit will increase your credit score and will provide lenders with the assurance that you are a responsible borrower.
In Canada, one of the major advantages of being self-employed or owning a corporation is that you can deduct certain business expenses, such as business travel, legal expenses, corporate education, and business meals that accumulate on your personal or corporate credit cards. This is one major advantage of being self-employed which salaried employees cannot access.
A benefit of writing off these expenses is that you can save on your income tax. The drawback is when applying for mortgages or loan through a bank you will be limited by the amount of the mortgage or loan you can qualify for and the interest rate discounts.
How hard is it to get a mortgage for entrepreneurs (Self-Employed)
Even though self-employment shouldn't make getting a mortgage difficult, obtaining one through a bank can be much more stressful than it would be for an employee paid by salary or hourly. Almost all lenders requirements include that borrowers provide their income in detail which includes their net worth, credit score, tax documents, letters of employment, etc. Self-employed entrepreneurs do not receive T4s outlining their yearly income and that is why they have to apply with a stated income application which many institutional lenders such as the big banks do not accept. Self-employed entrepreneurs have to prove their stated income through a variety of different methods and documents. Lenders are not capable of measuring someone's income precisely in order to verify your application with certainty, therefore it is best to gather as many documents as possible and account for every dollar earned so that your chances for approval are as best as possible.
The more evidence you can provide to lenders the better your chances for approval with a favorable interest rate.
The more evidence you can provide to lenders the better your chances for approval with a favorable interest rate.
What documents do I need for a stated income mortgage?
Most lenders require Income taxes for the last 2 years
You’ll need to prove to banks and Private Lenders alike that you do not owe any taxes to the government and that you have paid your taxes up to date
Provide business income statements and debt statements relating to your business, it's important to be transparent with lenders and withholding important information about your business finances can impact your application negatively
Provide bank statements that outline all sources of income and every dollar that has entered your account, the more income you can prove the better interest rate you can qualify for
Provide proof for future income, such as contracts you may have coming up that have not yet been fulfilled. Secured contracts are proof that money will be coming in the near future with can be considered future income
Provide a copy of your business license or articles of incorporation, if you have one
A credit check may also be required to stay away from new debts or big financial obligations/purchases and do not miss any bill or credit card payments
Over time we have witnessed many scenarios when self-employed applicants were either approved and denied. We have learned the habits and patterns of A and B lenders such as banks, Credit Unions, and trust companies along with the appetite that Private mortgage lenders carry.
Applicants with a good credit score of 680 or higher who can provide a down payment of 20% or more can qualify for lower interest rates. If you meet all the necessary criteria and add mortgage default insurance that can be obtained through Canada Mortgage and Housing Corporation (CMHC), Canada guaranty or Sagen you will qualify for the lowest AAA interest rates available.
You’ll need to prove to banks and Private Lenders alike that you do not owe any taxes to the government and that you have paid your taxes up to date
Provide business income statements and debt statements relating to your business, it's important to be transparent with lenders and withholding important information about your business finances can impact your application negatively
Provide bank statements that outline all sources of income and every dollar that has entered your account, the more income you can prove the better interest rate you can qualify for
Provide proof for future income, such as contracts you may have coming up that have not yet been fulfilled. Secured contracts are proof that money will be coming in the near future with can be considered future income
Provide a copy of your business license or articles of incorporation, if you have one
A credit check may also be required to stay away from new debts or big financial obligations/purchases and do not miss any bill or credit card payments
Over time we have witnessed many scenarios when self-employed applicants were either approved and denied. We have learned the habits and patterns of A and B lenders such as banks, Credit Unions, and trust companies along with the appetite that Private mortgage lenders carry.
Applicants with a good credit score of 680 or higher who can provide a down payment of 20% or more can qualify for lower interest rates. If you meet all the necessary criteria and add mortgage default insurance that can be obtained through Canada Mortgage and Housing Corporation (CMHC), Canada guaranty or Sagen you will qualify for the lowest AAA interest rates available.
The Advantages of a self-employed mortgages are:
Self-employed business owners and entrepreneurs save incredible amounts of money in taxes annually. This is a fact and can continue to serve you with a self-employed stated income mortgage. You can continue to save on taxes while qualifying for a low-interest variable or fixed-rate mortgage.
Lender who accept stated income mortgage applications for self-employed individuals will typically provide you with a higher mortgage amount.
These same lenders also offer low interest rates that are provided specifically for self-employed Canadians. If you can prove enough income and have a sufficient amount of money 20% or more for a down payment, you can qualify for mortgage default insurance through Canada mortgage and housing Corporation (CMHC) Canada guaranty or Sagen which will play an important role in obtaining a lower interest rate.
The lenders we can connect you with will provide you with more funds (Higher loan amount) and better rates guaranteed. By working with Toronto Private Mortgage your gain access to all of our lenders and we will carefully choose the lender that fits your particular situation who can over deliver on your expectations.
Banks often have a long and tiring application process and most times will deny you a mortgage at the very last minute. People who have been denied by banks can tell you how discouraging it can feel. Sometimes applicants have to wait weeks just to get denied. That is unacceptable here at Toronto Private Mortgage. Most lenders we work with can you an approval within as little as 2 days and sometimes literally in a matter of hours. The approval process is quite simple. It also depends on the complexity of the mortgage product being sought. We have closed many mortgages within 48-72 hours. The mortgage might take a few days to fund but in most cases we can get you an approval the same day if you provide us with a complete mortgage application and have all the necessary documents on hand. Our lenders have been in the mortgage industry for a long time and can make quick investment decisions. Pairing the right lender with the right borrower is an art we have perfected.
Lender who accept stated income mortgage applications for self-employed individuals will typically provide you with a higher mortgage amount.
These same lenders also offer low interest rates that are provided specifically for self-employed Canadians. If you can prove enough income and have a sufficient amount of money 20% or more for a down payment, you can qualify for mortgage default insurance through Canada mortgage and housing Corporation (CMHC) Canada guaranty or Sagen which will play an important role in obtaining a lower interest rate.
The lenders we can connect you with will provide you with more funds (Higher loan amount) and better rates guaranteed. By working with Toronto Private Mortgage your gain access to all of our lenders and we will carefully choose the lender that fits your particular situation who can over deliver on your expectations.
Banks often have a long and tiring application process and most times will deny you a mortgage at the very last minute. People who have been denied by banks can tell you how discouraging it can feel. Sometimes applicants have to wait weeks just to get denied. That is unacceptable here at Toronto Private Mortgage. Most lenders we work with can you an approval within as little as 2 days and sometimes literally in a matter of hours. The approval process is quite simple. It also depends on the complexity of the mortgage product being sought. We have closed many mortgages within 48-72 hours. The mortgage might take a few days to fund but in most cases we can get you an approval the same day if you provide us with a complete mortgage application and have all the necessary documents on hand. Our lenders have been in the mortgage industry for a long time and can make quick investment decisions. Pairing the right lender with the right borrower is an art we have perfected.
Some of the disadvantages of stated income mortgages
Qualifying for a stated income mortgage at one of the big banks is a long shot. While it is possible to get approved for a stated income mortgage at a bank, the mortgage product you qualify for might not fit your needs. The amount of mortgage funds you qualify for might not be enough. Banks and lenders are trying to adapt to the world of self-employed entrepreneurs, we are still in the early phases of the shift, which makes it hard to get funded by a traditional national bank.
This is where our expertise and extensive list of alternate and private lenders have come in handy. Our lenders are flexible and easy going and most times don’t require a lot of documents to get a great mortgage product.
Borrowers have to understand that all lenders are in the money business, whether dealing with banks or private lenders. That means they reward applicants who do not pose a great risk to their investment which is the money they loan out. The riskier the borrower the higher the interest rates. The less documents you provide such as proof of income and credit score the higher the rates will be. Having a good credit utilization will benefit you more that you know. Not spending more than 30% of your available credit, this includes a revolving line of credit, credit cards, or department store credit cards, is vital to keeping your credit score high. Never spend more than 30% of your credit and always pay for your bills on time, if you are planning on applying for a mortgage. Lenders are worried whether borrowers can make their monthly mortgage payments.
Things you should do to get approved for the lowest possible interest rates are:
If you can follow these guidelines, chances are in your favour of getting approved with a low interest rate for a stated income mortgage. Since 2019 the demand for unconventional lenders has risen and this is largely due to more and more people seeking self employment.
Toronto Private mortgage has the ability to provide customized mortgages that meet the specific needs of our clients down to the last detail. No matter who you are or where you live. We never put our clients at financial risk and we always advise our clients on the safest route. When we work for you, we work for you at all hours including on weekends and on holidays if that is what we need to do to get you an approval.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!
This is where our expertise and extensive list of alternate and private lenders have come in handy. Our lenders are flexible and easy going and most times don’t require a lot of documents to get a great mortgage product.
Borrowers have to understand that all lenders are in the money business, whether dealing with banks or private lenders. That means they reward applicants who do not pose a great risk to their investment which is the money they loan out. The riskier the borrower the higher the interest rates. The less documents you provide such as proof of income and credit score the higher the rates will be. Having a good credit utilization will benefit you more that you know. Not spending more than 30% of your available credit, this includes a revolving line of credit, credit cards, or department store credit cards, is vital to keeping your credit score high. Never spend more than 30% of your credit and always pay for your bills on time, if you are planning on applying for a mortgage. Lenders are worried whether borrowers can make their monthly mortgage payments.
Things you should do to get approved for the lowest possible interest rates are:
- Declare as much as income possible on your income taxes
- Save at least 20% for a down payment- the more the better
- Pay all your bills on time and do not spend more than 30% of your credit limit
If you can follow these guidelines, chances are in your favour of getting approved with a low interest rate for a stated income mortgage. Since 2019 the demand for unconventional lenders has risen and this is largely due to more and more people seeking self employment.
Toronto Private mortgage has the ability to provide customized mortgages that meet the specific needs of our clients down to the last detail. No matter who you are or where you live. We never put our clients at financial risk and we always advise our clients on the safest route. When we work for you, we work for you at all hours including on weekends and on holidays if that is what we need to do to get you an approval.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!