1. Business Documents
- Business Number Registration
- Articles of Incorporation
This will prove how long your business has been functional (only a requirement for corporations). You are required to submit your GST/HST number if your gross sales or revenue in a single quarter of a calendar year totals more that $30,000.
2. Notice of Assessment
Your NOA is a must as it reflects any possible unpaid taxes owing. Your T1 General income tax returns may be sufficient to sum up your income for some applications.
Please note: Unpaid taxes are a huge concern because the CRA could find cause to eventually register a lien against your property and list it for sale on the market.
3. Financial Statements
When you are wishing the lender to qualify your mortgage as non-traditional income, financial statements are particularly necessary.
4. Bank Statements
Bank statements are just another way to prove your income and the lender will look upon this favorably. It’s also a good idea to include your T2 Corporation income tax return, and ongoing contracts with expected revenue.
What About My Credit Score?
Your credit score is another consideration for lenders when assessing the qualifications you have for a self-employed mortgage.
Based on your history of borrowing and returning money, your credit score indicates to a lender whether you are likely to repay your loan down the road. Scores range from 300 to 900, with anything over 660 considered a good score, and a score over 725 plus being a very good score.
Bank programs such as RBC Self Employed Mortgage, Scotia Mortgage for Self-Employed, and National Bank Mortgage for the Self-Employed, and more, are options for the self-employed. Although BMO, CIBC, and TD do not have specific platforms for the self-employed business owner, they may consider and assess mortgages fairly.
Maximum loan requirements and minimum down payments vary from bank to bank.
Self-Employed Mortgage Lenders Are Out There
Historically, A-Lenders and B-Lenders handled the bulk of mortgage lending. A-Lenders generally have more definite criteria to meet – stress test, stable income and good credit.
B-Lenders, however, require fewer qualifications from the self-employed and are considered more flexible and may arrange a mortgage in a few days time. A private loan will allow you to use the property you currently own as collateral for a self-employed mortgage.
Even if you have bad credit or no credit history, you may qualify for a private mortgage. A private mortgage loan is also ideal for someone who requires funding quickly – often funded within seven days.
Is a Mortgage Broker Right for Me?
A mortgage broker versed in alternative and flexible financing may be your best option if self-employed. In addition to suggesting the best mortgage solutions and best lenders, a mortgage broker will also assist with your loan application and can submit your application to more than one lender, giving your mortgage application the best chance for acceptance.
5 Steps to Qualify and Secure Your Mortgage
1. Ensure that you have at least two years of verifiable self-employment income.
2. Gather all your documents including income tax returns, financial and bank statements, most recent Notice of Assessment, and any other pertinent information relating to your business.
3. Strengthen your credit score to obtain the best mortgage rate. A score of 600 is required to meet CMHC requirements.
4. Maximize your down payment. Insured self-employment mortgages require 5% and uninsured require a higher amount.
5. Find a mortgage broker that you are confident will understand your needs and provide you with a mortgage loan to suit your goals.
For more information, call or text Penny @ (604) 787-3809. We will assess your situation confidentially, in detail.