Self-Employed

 At Service1 Mortgage & Finance, we understand that self-employed individuals and  business owners have unique circumstances when it comes to securing  mortgage loans. Because of tax write-offs, their documented incomes tend  to appear much lower than they actually are which can create  complications during the loan application and approval process.

If you are self-employed, turn to the Service1 Mortgage & Finance Team for help securing:

• A mortgage loan
• A loan for home renovations
• Financing for your other personal needs
• Debt consolidation

The  following points are suggestions on strategies on how to plan ahead and  be prepared when you, as someone who is self-employed, are ready to  move forward in arranging a mortgage for property purchase.

• Ask  your Mortgage Broker about STATED INCOME. There are options with some  lenders to State your income. This is based on you being in the same  profession for at least two years previous to being self-employed. The  lender looks at the industry and researches the mean income of someone  in that same profession within a reasonable amount of time. STATED  INCOME is a complicated approach to showing income. However, your  Dominion Lending Centres Mortgage Professional will know what questions  to ask and how to negotiate this kind of proof of income. Documents such  as bank statements, showing consistent deposits, will be requested by  the lender.
• BANKRUPTCY: Although some business  people see bankruptcy as a viable option to get out of a bad deal and  regroup, lenders generally do not like bankruptcy. Nevertheless, some  lenders will overlook this if there has been consistent and excellent  credit since the time of bankruptcy and you have been fully discharged  from the bankruptcy for a specific time period. Make sure you keep ALL  Bankruptcy papers easily available along with your discharge papers.
• Be  prepared for higher interest rates. Lenders offer discounted rates to  those that fit in the “box”. Those that are not conventional are seen as  a risk and, therefore, are applied to a higher interest rate. There  also could be lender fees attached to the mortgage.
• Offer a  larger down payment. Lenders are somewhat handcuffed to the insurer when  there is less than 20% down payment on a property purchase. But if you  offer more than 20% down payment, depending on the lender, their  flexibility increases and it is up to the lender or even the branch if  they want to take you on as a client.
• As a last resort, you can  do private financing. Even though it is an expensive option, it could  result in the mortgage you are looking for. Rates are higher and there  will be lender/brokerage fees. However, you could be in a private  mortgage for 12 months or even less, whereby giving yourself time to  improve your credit (if need be) or topping off a two year self-employed  period to set yourself up to show STATED INCOME to the lender. The  whole point of private financing is to use it as a short term solution  for a long term plan.