There are a lot of advantages to being a self-employed entrepreneur. There’s more independence, you can set your own hours, earn more money, and choose who you get to work with. It’s a different story though if you want to get a mortgage to buy your dream home.
Over the last number of years, the traditional lenders have implemented a number of very strict lending rules and the banks have cracked down on mortgages for those people who are self-employed entrepreneurs with no reportable income.
This has become extremely frustrating to those applicants because they may have a real estate deal pending a financing condition and the banks are just saying “no” because of new tighter rules.
This is where private lenders come in to help get you the mortgage you need.
In addition to reducing the amortization period and raising the minimum down payment required to purchase a home, in 2014, the Canadian Mortgage and Housing Corporation (CMHC) discontinued mortgages for those who are self-employed without third-party validation. Before that, self-employed Canadians and contractors only had to state their income. Not anymore.
This squashed the home ownership dream for hundreds of thousands of Canadians. That’s because 2.76 million Canadians are self-employed; a whopping 15% of the country. And more and more Canadians step into the ranks of the self-employed every year.
Unfortunately, the big banks don’t really respect entrepreneurs and view them as risky. Because you are a self-employed entrepreneur, and might draw a smaller income for tax purposes, the bank thinks there’s a greater change that you’ll default on a mortgage.
Even if one of the big banks does offer you a self-employed mortgage in Toronto, you won’t be treated the same as if you worked for someone else. They might expect you to provide them with a down payment of 30%. That’s a lot higher than the 20% minimum down payment for those who are not self-employed and the five percent down payment required for those who get a government-backed mortgage.
Canada’s tighter lending rules only impact those who turn to Canada’s big banks. Non-traditional lenders like Canadalend.com, are not bound by the same mortgage rules. That’s a fact that’s becoming more evident to an increasingly larger percentage of the population.
A growing number of Canadians are turning to mortgage brokers like Canadalend.com who work with private mortgage lenders for their no-income mortgages in the Greater Toronto Area. Upwards of 10% of all mortgages originate with non-traditional lenders. That share of the market has grown significantly since the 2008-2009 recession.
Mortgage brokers who deal with private lenders instead of banks, like Canadalend.com, fill an important void left by the highly regulated banks. We give potential borrowers the chance to secure a self-employed mortgage or no-income mortgage.
If you’re an entrepreneur and are being prevented from getting on the property ladder by the big banks, the independent, licensed mortgage agents at Canadalend.com can help. Because Canadalend.com is independent, they have access to hundreds of different lenders—many of whom specialize in lending to those who are self-employed and don’t have a long enough income track record, are single income earners, or simply may not qualify for the bank’s stricter and stricter terms.
The fact is, you can still get a self-employed no-income mortgage—it’s just going to take a little more effort. At Canadalend.com, we can help you determine what kind of mortgage is best suited to your financial and lifestyle needs.
If your income doesn’t meet the unreasonable requirements set forth by the big banks, other lenders are willing to step in and help you secure a no-income mortgage. That’s where Canadalend.com comes in. Lots of lenders look for different ways to help those who are self-employed increase their mortgage eligibility.
Why? The private lenders that Canadalend.com works with understand that those who are self-employed look for ways to minimize their taxable income.
Some lenders do not ask for traditional proof of income, instead they rely on bank statements. In some cases, if you’re self-employed or your income fluctuates, a lender will tack, for example, 15% on to your reported income to increase the amount you can borrow, if you can show business deductions total more than that.
Since private lenders do not follow the same rules as the banks, they can also extend a mortgage of up to 95% of the purchase price to someone who is self-employed; all without the need of costly default insurance.
Because of stricter lending rules, the big banks want to see as much documentation as possible. Proof of income can be difficult to verify for those who are self-employed. Canadalend.com streamlines the mortgage process. We’ll sit down with you, look at your situation, and help you determine which kind of loan you qualify for.
Not only that, but the mortgage experts at Canadalend.com can help you get approved for a home equity loan or home equity line of credit, even if you’re self-employed, usually within 24 hours or less. How do we do that? Because we’re independent and have a streamlined structure, we have more power and authority to get you approved as quickly as possible.
We also understand that there is more to getting a mortgage than just finding one with the lowest interest rates—though that’s certainly important, since a lower interest rate will help you save tens of thousands of dollars over the life of the mortgage.
The licensed mortgage professionals at Canadalend.com want to make sure you understand every aspect of the mortgage process, every step of the way. This includes working out the best amortization period, whether a fixed or variable mortgage is best for your particular situation, or whether you want an accelerated repayment plan. It also means going over the fine print, making sure you understand the terms and conditions, and are fully aware of any costs or penalties.
Canada’s traditional lenders make it very difficult for those entrepreneurs who are self-employed and have an unreliable income or no reportable income to secure a mortgage. If you’re self-employed, are looking for a mortgage, and have been turned down by any of the big lending institutions, Canadalend.com can help you overcome the hurdles and secure a mortgage.