Tom is self employed and owns a restaurant that is doing quite well. His business is improving year over year with loyal customers. Even though Tom is making a decent living, not all of his income that he earns is declared on his income taxes. Tom has been able to save a bit of money and wanted to buy a new home for his family. He approached his bank to see if he could get a mortgage and his bank turned him down because his declared income was not high enough to support the servicing of the new mortgage.
Tom was referred to a DMC agent who looked at his situation. While Tom's declarable income was not high enough to qualify him at a bank, DMC had access to other lenders who specialize in working with self employed borrowers who gave Tom a mortgage.
DMC was able to listen and understand my situation and assist me in finding a solution rather than just saying no.
Getting a Self Employed Mortgage With Your Bank Can Be Difficult
There are so many benefits to working for yourself and being your own boss such as the ability to deduct expenses that the typical person cannot.
This can sometimes make qualifying for a mortgage a challenge because most self-employed people simply write off as much expense as possible. By doing so, you are not showing enough income to service a mortgage. However, if you have a reasonable down payment of 20%, there may be more mortgage options available for you to consider.
Another reason why getting a mortgage as a self-employed individual can be difficult is because the banks always want us to prove our income the same way a salaried individual would.
The funny thing is that an employer can write an employment letter for an employee and the banks will accept this letter as proof of income and give them a mortgage. However, for a person that is self-employed to prove their income they have to jump through a whole bunch of different hoops to qualify for a mortgage with the banks.
At Discount Mortgage Canada, we understand what it is like to be self-employed and understand all the rules around qualifying for a mortgage. Give us a call to see what we can do for you!