Mortgage Financing For The Self Employed
“Self Employed Mortgage Financing Programs Have Suddenly Become More Difficult To Acquire”
Self employed mortgage financing has evolved considerably over the last decade with most major lenders and many second tier mortgage lenders offering different types of self employed or stated income mortgages to self employed individuals who could not easily provide support for their annual income as compared to an employed person with T4 slips and pay stubs.
With some stated income approaches, the applicant was basically signing an statement of what their annual income was.
Certain other lenders were doing stated income mortgages under insured programs.
Much of this changed in the first week of February, 2012 when mortgage lenders altered or removed their stated income programs altogether.
There are a number of reasons for these changes, including some potential changes to lender access to CMHC insurance for these types of deals.
Regardless of the why, the reality is that if you are self employed, or cannot support proof of repayment of a mortgage through employed earning documentation, then, for at least the time being, its going to be more challenging to get a self employed mortgage approved.
That being said, the higher the equity in a property and the stronger the credit profile and net worth of the applicant, the less likely these changes are going to impact them.
But for the more common scenarios where stated income declarations and/or mortgage insurance were required to get financing in place, the process for locating and securing mortgage financing is now going to be a bit more challenging.
For instance, most of the lenders that were doing stated income are now requiring a greater degree of financial proof of earning and over a longer period of time, say three years on the average.
So its going to be more important to be able to have supporting documentation to show you have generated sufficient funds as a self employed person, regardless of how it gets reported for tax purposes, to service a given mortgage amount. And the manner in which this is further assessment is performed can vary from lender to lender as well.
If you are in need of a self employed mortgage, or would like to better understand your options and how to go about the process of acquiring one, I suggest that you give me a call so we can go over all the changes in the market together and review different approaches for meeting your mortgage requirements.
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