Self-employed mortgages: seven tips to help you qualify

Self-employed mortgages: seven tips to help you qualify

self-employed seven tips to help you qualify for mortgage while self-employment is certainly common today running your own business can make getting approved for a more each more difficult while minimizing your net income is important to pay less tax it works against you when it comes time to apply for a mortgage so as a self-employed person what can you do to ensure you have a strong application and improve your chances of qualifying the first thing you'll need to do is provide income validation to prove your earnings validation documents can include your previous two years notice of assessment or financial statements prepared by an independent third party some financial institutions will also accept statements of business activities the better your lender understands your financial position the more flexible they can be income validation is now more important than ever as of May 31st 2014 the Canada Mortgage and Housing Corporation or CMHC will no longer provide insurance for self-employed mortgages without it and for many this insurance is required another way to help your application is to be organized and present a clear picture of your financial situation ensure all tax deductions are supported by appropriate documentation filing your taxes on time and paying monies old is also key consider your credit rating paying your bills on time and keeping your credit obligations clean keeps your credit rating as high as possible if you have any credit issues resolve them before you apply another thing to think about is your debt to income ratio as your debt increases the portion of your income needed to service it increases as well lowering your debt by perhaps paying off a few smaller loans may help you get approved for a larger mortgage it's no secret that income for self-employed individuals can fluctuate workload varies and there may be periods when income is reduced building two months or more of cash reserves can cover these periods and help you qualify keep in mind that credit unions can often be more flexible than banks in during your mortgage since we understand you incur extra costs to earn income we will typically add an extra 15 percent to your reported income when calculating your mortgage eligibility helping you qualify based on a more accurate picture of your true earning power we can explore options like extending your amortization period beyond a 25 year term and we can use a longer three-year average income when approving your application we also strongly suggest you build a long term relationship with your financial advisor the more we know about you and your business the better we can understand your ability to service your debt and get you the mortgage you deserve

One thought on “Self-employed mortgages: seven tips to help you qualify

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