Self-Employed Mortgage Canada 2023

Best Self-Employed Mortgage Broker in Canada

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Self Employed Mortgage Canada, Toronto & Ontario

Does being self employed affect getting a mortgage?

Can I get a mortgage being self-employed in Canada? Being an entrepreneur has many perks. An important one is being able to write off purchases as business expenses. This is great for paying fewer taxes but, when it comes time to qualify for a mortgage, it’s often challenging because banks qualify self-employed borrowers based on the net amount of income declared! This is the amount after all expenses are written off. Typically, this amount is low for self-employed borrowers who saved money during tax season!

So, can you get a mortgage if you are self-employed?

Arash Sef has access to a vast array of lenders offering low rates through stated-income programs specifically designed for self-employed borrowers! Thanks to these common-sense lending programs, we’ve been helping business owners, big or small, get approved for mortgages across Ontario.

If you’re self-employed and you’re looking for mortgage approval, contact us today and ask about our stated-income program for self-employed applicants. We’ll explain how we can successfully approve your mortgage with low rates, even if you’re self-employed.
Contact us today to get an instant quote on your self-employed mortgage in Canada.

How to Get a Mortgage Being Self Employed in Canada 2023

Are you a business owner or self-employed contractor in Canada? Getting a mortgage for self-employed isn’t that difficult if you work with an Expert mortgage agent such as Arash Sef. In fact, we simplify the process as we specialize in Self-Employed Mortgages in Toronto, Ontario and the rest of Canada.

Many lenders have made the process of obtaining a mortgage difficult for self-employed borrowers. But we can make it easy for you. We will explain the process thoroughly, while guiding you on how to get a self-employed mortgage, step by step.

Arash Sef is passionate about helping self-employed people achieve their home ownership goals. We have a dynamic team that’s here to help you every step of the way, from educating you on all the options available to finding just the right mortgage for your situation.

What Is a Self-Employed Mortgage?

If you’re a self-employed professional and you’re looking to get approved for a mortgage in Canada, you’ll need a self-employed mortgage through a mortgage agent that understands the different stated income programs offered by B Lenders. We have access to all the B lenders and know which self-employed applicants fits best with which lender. This is due to the high volume of self-employed mortgages available.

A self-employed mortgage can be for a residential home or even commercial property such as a retail store, or an industrial property etc.. In either case, the owner or buyer of the property must be someone who is self-employed or owns their own business or corporation. Many self-employed applicants are sole proprietors.

With Banks and A lender, to get approved for a self-employed mortgage, most lenders will require that you have been in business for at least 2 years and have a good credit history. They’ll also use your net declared income based on your most recent 2 years of notice of assessments. Whereas B Lenders go based on your gross income by verifying your most recent 3-6 months of bank statements. This almost always allows the borrower to qualify for a higher mortgage.
The challenge with self-employed borrowers is that Self-Employed applicants typically declare a much lower amount of net income on their income taxes than the gross business income. Given that the banks all lend based on a two year net average of income declared, self-employed applicants always struggle to qualify for a higher loan amount. Not anymore! We have 10+ B lenders that will allow us to qualify your mortgage based on your gross income as per your bank statements. The process is much different than a getting a salaried employee approved for a mortgage. However with our expertise, you will see how simple the self-employed mortgage process in Canada can be with Arash Sef.

If you’re feeling frustrated with the self-employed mortgage process, please call us today to allow us to provide expert guidance and a mortgage approval tailored to your self-employed income.

Do you have questions about self-employed mortgages?

Call us today to speak to an expert licensed mortgage broker. 647-588-0488

Self-Employed Mortgage: Qualifications In Canada

How do I qualify for a mortgage if I am self-employed? We offer two options for self-employed clients seeking a mortgage. These options also apply to individuals who are paid based on commission and receive a T4A from their employers and are responsible for their tax filings.

  1. Notice of assessments
  2. Bank statements

Below you will find each route and how to use each method to your benefit as a self-employed business owner in Canada.

Method #1: Qualifying for a Self-Employed Mortgage with Notice of Assessments

For this first method, our team will evaluate your Notice of Assessment from the Canada Revenue Agency for the past two years. You should receive a Notice of Assessment from the Canada Revenue Agency (CRA) every year after filing your income taxes. This is document outlines the government’s evaluation of your tax return.

Your Notice of Assessment will show us the net income that you claimed (after expenses) for the years that these documents are for. The lender will take an average of the last two years of income if the most recent year’s income is higher than the previous year. If the most recent year of net income is lower, the lender will go with the lower amount of income declared of the two years.

Even though most self-employed people do not declare their full income on their tax returns, they can claim several credits that reduce their overall tax obligations.
With several kinds of tax write-offs available to them, self-employed individuals can deduct expenses while claiming credits.

We recommend that you consider the second method if you feel that your notices of assessment may give a false view of your income or if the income declared is simply not high enough to use for mortgage qualification.

Method #2: Qualifying for a Self-Employed Mortgage with Bank Statements

If you’re self-employed, you may have a difficult time getting a mortgage loan. Banks are wary of lending to those with fluctuating incomes, and they require that the applicant provide detailed documentation of their business’s cash flow.

But your bank statements can help us understand how much money you make from your business. Your six-month bank statement can give us an idea of how much you’re making currently. The information on your bank statements will be used to help us determine whether or not we can help you secure a mortgage loan.

If you recently have become self-employed or if your recent income is lower than your previous income, you will want to use this application method to get a mortgage. Arash Sef is an expert at qualifying mortgage borrowers that are self-employed by using their business or personal bank statements under various stated income programs offered by our trusted and reputable B Lenders.

How to Increase Your Odds of Getting Approved for a Mortgage

Tens of thousands of Canadians take out mortgages every year. And for most, getting approved for a home loan is one of the easier parts of the mortgage application process. There are several factors that your lender will consider regarding your mortgage approval. From your credit score to employment, down payments, and income sources, there are many pieces to the mortgage application puzzle.

Let’s discuss the details a lender wants to see in your application:

1. Have a Good Credit Score

Your credit score is a big factor in whether or not you will be approved for a mortgage loan. If you want to get the best rates being offered by lender for your mortgage approval, you need to have a good credit score (above 680).

Many things affect the calculation of your credit score, including payment history, debt-to-income ratio, and length of time with each account. The better these factors are for you, the better chance you have of getting approved for a mortgage loan.

Business owners should always be aware of their credit scores. Since small businesses are known for taking on debt before the company is in a stable position financially, these debts can negatively impact their credit scores.

As long as you pay your bills on time, you won’t have a problem with your credit. However, if you are late or miss payments on bills, this could cause your credit score to drop. A low credit score doesn’t necessarily disqualify you from receiving a mortgage, but it’s important to be aware of the effect that missed or late payments can have on your ability to qualify for a loan. Also having too much debt will negatively impact your credit score and the credit bureaus in Canada (Equifax and TransUnion) reward clients with positive credit ratings each month if the balance of the debt is low. High debt results in the bureau giving negative scores to the borrower as credit utilization is a key factor when the creditors report each month to the credit bureaus in Canada.

Your mortgage lender will look at a seven-year history of your credit report when evaluating your application, so it’s best to establish good credit habits over the years prior to applying for a mortgage.

Offer a Higher Down Payment

If you can manage, we often suggest that you offer a higher down payment for the mortgage loan. By doing so, you will reduce the lender’s risk and the interest rate they are required to charge you. In addition, if you have saved up some money for a down payment, it is much easier to qualify for a mortgage loan than if you were applying with no money saved up.

The amount of money that you can put down as a down payment varies by lender and loan program. Here are some general guidelines:

If you want to buy a house for $500,000, and are putting $100,000 as down payment, the remaining $400,000 will be mortgages by a lender. For this $400,000 mortgage, you will require a approximately 3% ($12,000) as a closing cost. The lender will not lend on the closing cost. Therfore, you will need to have the closing cost from your own savings or resrouces. Gifted funds can also be used for down payment and closing cost.

If you are qualifying for a mortgage through your bank statements, you must pay at least 20% down with all B Lenders. Some B lenders will also require 25% down payment if the property is located in a rural area or if the water and sewer are not on municipal services. However, if you are qualifying through your notices of assessment through an A lender (banks), you can put 10% down when purchasing an owner-occupied home. Also all mortgages for rental properties require a minimum of 20% down payment regardless of the lender being an A or B lender.
Standard Canada Mortgage and Housing Corporation insurance applies to borrowers putting a down payment lower than 20%. All mortgages that are insured will have the insurance premium rolled into the mortgage and it will be amortized along with the mortgage loan amount.

One way to increase your odds of getting approved for a mortgage is by making sure all of your documents are in order before applying for financing. This includes having up to date proof of employment such as recent pay stubs or recent employment letters (dated within 30 days of submission to lender), as well as most recent 3 months of bank statements confirming employment and other income deposits such as rental income or child tax benefit, and other supplementary income.

Have Lower Debt

You should be mindful of how you’re using debt and how it impacts your mortgage approval. The less debt you have, the better your application looks when applying to a lender. People with little debt, tend to have better credit scores and get approved for mortgages more easily than those with large amounts of debt. This is become all A and B lenders have debt servicing ratio requirements.

Having low debt, shows lenders that you have the capacity to manage your debts which gives them confidence to approve your mortgage request.

It is not necessarily bad to have debt. You can use debt intelligently. However, you should be careful not to let the debt amount get out of control to a point where you are falling behind on payments.

Provide a Solid History of Self-Employment

Several factors go into a mortgage lender’s decision about whether or not to give you a loan. One of these factors is the stability of your financial situation, and how long you’ve been self-employed. The longer you can sustain yourself financially, the more likely it is that you will be able to make your mortgage payments consistently.

On the other hand, self-employed individuals have shown a tendency toward longevity in their careers. The longer you’ve been self-employed, the more credible your claim to professionalism.

To qualify for a mortgage, most banks require two years of self-employment income and tax returns. Some lenders may make exceptions for applicants with substantial down payments or good employment history.

To qualify for a mortgage, using bank statements, you can be self-employed for less than two years, so long as your most recent 6 months of business bank statements or personal bank statements (for those that are sole proprietors) show good cash flow generating from business revenues.

Keep a Collection of Accurate Records

Good records are essential to making sound business decisions. You should keep track of your business records for at least the past three years.

If you keep your financial records organized and can locate information easily, you may be able to get a mortgage more quickly. If your records are disorganized or you aren’t able to locate information, it might take longer for your mortgage lender to trust you with a mortgage approval.
We recommend that you gather your financial information before applying for a mortgage. This will keep all of your relevant information in one place, which makes it easier to access when you need it.

How Much Equity Can I Borrow?

Get a Free Self-Employed Mortgage by Comparing Payments & Rates. See How Much Equity You Can Borrow

Self-Employed Mortgage Options for Bad Credit

Even if you have bad credit, there are several ways to ensure that you’re approved for a self-employed mortgage. Credit is a key factor in a lender’s decision to approve and fund the mortgage, but there are other options available to you.

These are some of the other key variables that lenders use when deciding if they’re going to approve your mortgage application:

  • The amount you can pay for a down payment
  • The debt servicing ratios the borrower has
  • Current property/properties and liquid assets that the individual owns

The overall strength of the application determines if the lender will decide whether or not they approve your mortgage application. Approvals will not just dependent on your credit score as there are other variables lender’s take into considering when approving a mortgage.
If you’re concerned that your debt servicing ratio may be too high, you might want to consider alternative lenders such as B Lenders. They have higher debt-servicing ratio thresholds than traditional banks and A Lenders.

Alternative lenders may allow for gross debt service (GDS) ratio of up to 60% of your income. Plus, the total debt service (TDS) ratio may be up to 60% of your income as well.

Traditional banks and A Lenders have a requirement for GDS ratios to be up to 39% and a TDS up to 44%.

With alternative lenders or B Lenders, you’ll have a higher chance of getting approved for a self-employed mortgage in Canada with a higher amount of debt.

How Does Self-Employed Mortgage Refinancing Work?

Mortgage refinance for self-employed individuals is possible. However, it’s important to understand how the process works before you start.

Self-employed borrowers have more hurdles to overcome when it comes to qualifying for a mortgage loan. They may be unable to provide proof of income, which makes it difficult to establish whether they can afford the monthly payments on their mortgage.

Fortunately, there are options available for self-employed borrowers who want to refinance their existing mortgage loans.

What is Mortgage Refinancing and How Does It Work?

Mortgage refinancing is a fairly common way for homeowners with existing mortgages to renegotiate the terms of their agreements and obtain equity from their homes.

The benefits of mortgage refinancing include lower monthly payments and lower interest rates. The process itself is fairly simple when you work with Arash Sef as he specialize in mortgage refinancing for self-employed borrowers who don’t declare high amount of income on their Notice of Assessments. We are experts in this field and would be glad to provide you guidance and get your mortgage approved with quick turn around times.

Mortgage Refinancing Basics

Mortgages are typically made up of two parts: principal and interest. Principal refers to the amount borrowed from the lender, while interest is the percentage paid for borrowing that money. When you refinance a mortgage, the lender will give you new terms, which include a new interest rate, repayment term, and principal balance. To determine whether or not it’s worth refinancing your mortgage, you’ll need to weigh these factors against each other by contacting us and we will walk you through the pros and cons of refinancing.

When people refinance their mortgages, they can look for a better deal than the one they currently have. After they’ve spoken to various lenders and found a mortgage that they like, they can pay off their current mortgage and begin making payments on their new one.

Mortgage refinancing is an effective way to consolidate debt. For self-employed homeowners, it can be used as a safe strategy for handling bills and business expenses that have accumulated as a result of high debts. Individuals applying for a new mortgage can combine the amount left on their existing mortgage with other debts they may have when applying for a new one.

By taking out a new mortgage for refinance, which they then redistribute to their creditors, people can pay off one bill per month rather than several. It’s usually more affordable and leads to less accumulation of interest. Its always advantageous to consolidate high interest credit card debts and loans by the means of a low rate refinance mortgage in Canada.

Can I Refinance My Mortgage If I’m Self-Employed?

If you’re self-employed and want to refinance your mortgage, the banks won’t make it easy for you. Banks are typically used for salaried employees that have cookie cutter income and employment.

Banks will always use the business owner’s last 2 years of declared net income from their tax filings (Notice of Assessment) to qualify the mortgage amount requested. This method will almost always create challenges as mentioned earlier due to business owners declaring a lower amount of income due to having write-offs and business expenses.

However, there are other ways to qualify for a mortgage if you’re self-employed. One option is the bank statement mortgage, also known as the stated income mortgage programs. This allows self-employed homeowners to refinance up to 80% of their home value, using their most recent 6 months business bank statements or personal bank statements (for sole proprietors) to qualify. The qualification is based on the cash flow of the business in the last 6 months. For this method, the lenders also require a business licence (Articles of Incorporation for corporations or Master Business Licence for sole proprietors). Lastly, the lenders also require to verify a few invoices that cross reference a few business deposits on the bank statements.

If your most recent 6 Months' Business Bank Statements Don’t Show A High Amount Of Income

The bank statement mortgage program is designed to help self-employed homeowners who are having trouble qualifying for a mortgage with their current income. However, if you find that your business hasn’t been generating good amount of income or revenue in the most recent 6 months and this won’t allow you to qualify for stated income mortgage using bank statements, it doesn’t mean we cannot assist you. In this case, we would suggest getting a second mortgage or a home equity loan through one of our trusted private lending companies that do not have income qualification. The funds can be utilized to pay out debts and bring your credit rating higher in order for you to be in a better position by the end of the one year private mortgage term to refinance with a B lender by the end of the term.

This means that if you don’t qualify under the bank statement program today, it doesn’t mean you won’t qualify in the future.

Our self-employed mortgage process is fast, easy, and affordable. Get a free quote for a self-employed mortgage in Canada from Arash Sef. Simple and fast. The process takes just minutes to complete.

Self-Employed Mortgage Process in Canada

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Get the Knowledge and Experience of a Licensed Mortgage Broker

A licensed mortgage agent is a professional who deals or trades in mortgages for a licensed mortgage brokerage, under the supervision of a licensed mortgage broker. A licence mortgage agent must have a licence from FSRA.

Our Mortgage Agents have been trained and tested in various areas of home financing. They also have experience with hundreds of loans and can give you their opinion on whether or not a home equity loan is right for you.

They will be able to help you determine if this type of loan will fit into your financial situation, and if so, how much money you’ll need. They may also recommend other options for funding such as borrowing from family members or getting a home equity line of credit instead of taking out another loan altogether. If you’re looking for a home equity loan or refinance in order to Stop Power of Sale, Arash Sef can definitely help.

We can help you understand the most optimal solutions that you may not know about. Either refinancing your entire mortgage or helping you obtain a home equity loan through our large list of qualified private lenders.

Get in touch today to get a quote on your Stop Power of Sale mortgage and also receive unbiased expert advice by speaking with a licensed mortgage agent or broker.
You can also call us at 647-588-0488 to speak with an expert now to start the process today.

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