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ASK
OUR EXPERTS...
I am self-employed, and do not declare much personal income. How can I
qualify for a mortgage?
By Triston Rans of The Mortgage Group
Good news! Mortgage lenders and insurers have made great strides in
developing financing programs specifically geared towards those of us who
are self-employed. In fact, in some cases, it may be easier to qualify for a
mortgage under a Self-Employed Program!
If you are able to prove self-employment for over two years, more options
are available, including purchases with a 5 percent down payment (on
approved credit). This program uses your “stated” income. A mortgage lender
would not consider the income as shown on your tax return, but rather an
income that is “stated” by you. As long as the income stated “makes sense”,
any amount needed in order to qualify for the mortgage can be used. For
example, Lisa is a Message Therapist, and her tax return shows an annual
income of $20,000. For mortgage qualifying purposes, she “states” an income
of $70,000. This makes sense. If, however, Lisa needed an annual income of
$300,000 to qualify for her desired mortgage, her application may not be
approved, as that income does not “make sense” for her field of work. It is
important to note that you will still be required to provide your Notice of
Assessment from the previous taxation year, in order to confirm all income
taxes have been paid.
If you are not currently self-employed, but are considering it for the
future, you may want to register yourself as a Sole Proprietor now, in order
to get the “clock ticking” towards that magic two year mark. This can be
done at a local license and registry bureau for a nominal fee.
If you have been self-employed for as little as one day, you are still able
to get a mortgage under a “stated” income program, but a minimum down
payment of 15 percent of the purchase prices is required.
As with all financing, having a good credit rating will open more doors for
you, but if you have had some blemishes, hope is not lost (you can obtain
your credit report at
www.equifax.ca ). Every mortgage situation is unique. Consult with a
mortgage specialist who can personally navigate your credit report and help
determine which type of financing program is best suited for your particular
needs.
For further advice regarding your personal mortgage needs, please
contact Triston Rans, The Mortgage Group, at 403.571.8142 ext. 237 or
contact by email
tristonrans@mortgagegroup.ca
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