It's a sentiment the Self Employed in Canada know all to well: Mortgage approval frustration.
The fact is, getting approved for a mortgage in Canada can pose a challenge to even those Canadians with the best Credit scores and Employment histories. But lately, with the global economic crisis adversely affecting many countries all, self-employed individuals are taking one of the biggest blows.
If you're wondering why self-employed individuals face bigger problems when getting mortgages, here are just some of the reasons:
Small-time entrepreneurs and the recession
During difficult times, people tend to spend less. In the case of self-employed individuals - most of whom are running small time businesses - this means fluctuating net profits on a monthly or annual basis. This in turn provides lesser assurance for many lenders that you as the self-employed mortgagee will be able to handle his or her obligations responsibly.
Difficult verification of assets and income
Employed individuals have pay slips and employment records to show when it comes to income verifications. On the other hand, self-employed individuals rely on the performances of their respective businesses or ventures. This makes getting a verification on your assets and income as a self-employed employee all the more complex.
Lenders will have to scrutinize your financial records and income statements to ascertain whether your are capable of handling mortgage obligations or not. If you are self-employed, you need to be prepared for stricter requirements when it comes to securing a mortgage.
A better Solution
The good thing, however, is that with this obvious and growing need are new and emerging specific mortgage offers made for self-employed persons. With statistics showing that self-employed income earners account for nearly 20% and more of all Canadians, these specialty lenders realize that the Self Employed market is booming.
Our Mortgage Partner Best Mortgage offers connects the self employed with Specialty Mortgage Brokers all across Canada. Unlike traditional financing institutions, These lenders understand that the 'traditional' rules of mortgage application won't Necessarily work for you - and know exactly what it takes to get you the Mortgage you deserve, and at a competetive rate.
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There's no question about it, the self employed will always face greater scrutiny when it comes to getting a Mortgage. Often times lenders will use your Personal Credit History as a qualifying factor. It pays to make sure that you monitor this important information - and possibly make updates and/or changes before you apply. Want to know where you stand?
Typical Lending Criteria for the Self Employed
Compared to employed individuals, most self-employed persons, whether in Canada or anywhere else, have a more difficult time getting accepted for a mortgage. The ideal image of a borrower by most lenders is one who is stable and has a consistent stream of income as an employee.