Institutional Self Employed Mortgage Programs
“Even If You’re Self Employed and Not Reporting Much Personal Income, There Are Still Excellent Institutional Self Employed Mortgage Programs To Consider”
Banks and other institutional lenders recognize that self employed individuals can take many different types of tax planning approaches to lower their overall level of taxation, but which can also reduce their personally declared income in the process.
And because one of the primary criteria for qualifying for an institutional mortgage is assessment of repayment ability via personally reported income to the Canada Revenue Agency, reliance strictly on reported income effectively ends up penalizing self employed individuals that otherwise are very credit worthy and have sufficient means to service the mortgage amount they’re trying to secure.
This is where the self employed mortgage programs come in. They are designed to address this segment of the market that may not be able to show what I’ll call traditional employment earnings for mortgage qualification. Instead, the bank or mortgage lender offering the program allows them to declare their income, often times with no additional verification.
The keys to being considered for this type of mortgage program is the ability to demonstration that you have been self employed for at least 3 years and can provide business registration and activity based documentation that supports your claim of being self employed.
Some programs may still want to see your annual notices of assessment from CRA for the last 3 years and may also require that you declare your income in front of a notary and provide a sworn affidavit to the bank to further support your application.
Another key criteria for mortgage approval that is consistent with all institutional mortgages is that the self employed applicant must have strong credit, typically at a credit score level of 650 or higher, depending on the bank.
The self employed mortgage programs will vary in terms of the amount of mortgage they are prepared to underwrite related to the value of the property. For refinancing scenarios, the borrower can potentially secure a mortgage of up to 60% of the value of the property and up to 65% for a purchase. These programs also tend to cap out at real estate property values of a million dollars.
There is a fair amount of variability among the programs in the market, so its best to employ the services of a mortgage broker to find one that best fits your needs and financing profile.
If you’re in need of a self employed mortgage or would like to better understand you potential options, please give me a call and we can review your situation and the different program requirements together.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel