We are always amazed to learn the stories of our self-employed clients. Mortgages for self-employed individuals are normally very different from other mortgage types. This is squarely due to lenders placing emphasis on the applicant’s business performance over the applicant’s reported personal income (taxable income). As a result, we get to learn a great deal about the businesses of our self-employed clients.
Personal income of business owners is reported lower than the business owner’s actual income due to its unique tax treatment such as depreciation and tax write-offs. Adding to the fact that since tax minimization and tax deferral are financial objectives for all business owners, self-employed individuals almost always report personal income that is considerably lower than their actual income. Our mortgage lenders are aware of this fact and so have tailored mortgage solutions for the self-employed.
The major banks will use your reported personal income to determine your mortgage amount. Self-employed individuals are better off bringing their mortgage needs to us as we have lenders in our network that specialize in mortgages for the self-employed and approve amounts significantly higher than the major banks.
Furthermore, being in business for self usually entails a great deal of risk with periods of fluctuating income. Sometimes this results in a less than stellar credit history. Our lenders will also lend to self-employed individuals that have credit scores that don’t meet the major banks’ standards. Combined with a higher mortgage amount, we are the go-to mortgage specialist for self-employed individuals, including the most challenging of self-employed mortgage files.
The minimum requirements for a self-employed mortgage include evidence of at least two years of business for self along with evidence of no tax arrears. Your down payment amount will depend on the strength of your mortgage file keeping in mind that if your reported personal income amount is insufficient for your mortgage needs, generally, at least a twenty percent down payment may then be required. However, an exception may be possible for applicants with a clean credit history.
Our licensed mortgage professionals work for you – not the lenders – to ensure you receive the best rates and products available in today’s marketplace.