Here’s What You Need to Know to Get Ready for Your Mortgage-Approval!
If you’re self-employed, it can be more of a challenge to get a mortgage because you’ll need to prove you have a reliable income. But getting a mortgage when self-employed is certainly not impossible.
There are plenty of ways to prove to a mortgage lender that you have a reliable income, it’s usually just a case of jumping through a few extra hoops.
If you’re self-employed and looking for a mortgage, you will, in theory, have access to the same range of mortgages as everybody else, and you’ll need to pass the lender’s affordability tests in the same way as any other borrower.
But because there is no employer to vouch for your wage, self-employed people are required to provide far more evidence of their income than other borrowers.
To prove your income when you apply for a self-employed mortgage, you will need to provide:
- Two or more years’ T1 General
- Notice of Assessments (from CRA) for the past two or three years
- Evidence of upcoming contracts (if you’re a contractor)
- Evidence of dividend payments or retained profits and corporate financial statement (if you’re incorporated)
Lenders also prefer self-employed mortgage applicants to provide accounts that have been prepared by a certified, chartered accountant; that way they can be sure of your reliability. It’s likely that they will focus on the average profit you’ve earned over the past few years.
If you only have accounts for one year or even less, you may find it a challenge to convince a lender that you can afford to repay a mortgage – but, again, it’s not impossible. Having evidence that you’ve got regular work or providing proof of future commissions may help.
Just be aware your choice of mortgages may be more limited.
Having a healthy deposit and a good credit history will also help your chances of securing a mortgage when you’re self-employed.
As well as providing evidence of your income, you will also need to provide:
- Proof of tax payments
- Utility bills dated within 3-6 months
- Six months’ worth of bank statements
Lenders will want to examine your bank statements to look at the business cashflow and how much you spend on bills and other costs to be certain you could afford your mortgage repayments.
As long as you are prepared for the process, we can get you approved.
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