There are a lot of upsides to being self-employed, from flexible hours to creative freedom. As many budding homeowners will tell you, however, qualifying for a mortgage in Canada as a self-employed professional or a contractor can be a challenge. Banks can be wary of this type of buyer and may require additional conditions before they approve you. Here are some tips to boost your chances:
Have a sizeable down payment. Showing lenders that you have a down payment of at least 15 per cent can show them that your finances are in good shape and that you’re prepared to invest a sizeable portion of cash up front to fund your dream home.
Produce business contracts indicating future revenue. One of the reasons lenders are hesitant when it comes to self-employed buyers is because they perceive income as being less predictable. Producing client contracts that show proof of revenue for coming years can help you make your case.
Show proof that your taxes are paid in full. Taxes can be complicated for self-employed professionals. Showing government proof that your HST and GST is paid off in full shows that you’re a responsible professional with good credit.
Have your financial statements ready. Be ready to show your business license and break down your income, expenses and liabilities. A lender may request a more detailed examination of these elements if you’re self-employed, so having them ready to go can save you a lot of time.
Being self-employed might make it more challenging to qualify for a mortgage, but it doesn’t mean you’re destined to end up without your dream home. Being organized, forthcoming and diligent about tracking your business expenses and paying off taxes can go a long way to convincing a lender to qualify you.