Self Employed / No Income Qualifier Mortgage
Did you know...If you are self-employed you can still obtain a 35 yr. amortization period?
Conventional Self-Employed Mortgages
Even though the Bank of Canada has changed the rules to mortgages to reflect a maximum amortization period to 30 years, some lenders are still offering the extended amortization periods to self-employed individuals. If you have 20% down or greater (or 20% equity in your home for a refinance), you will qualify for a stated income mortgage with extended amortization periods up to 35 years. Ask me how?
Insured Self-Employed Mortgages
With regards to the Insured mortgages however (Less than 20% down payment or equity in your home)...the Bank of Canada has governed a minimum of 10% down payment on your purchase, and at least 15% in equity in your home on a refinance.
Self-employed applicants typically have a harder time proving their income. The benefits of writing many expenses down are great, yes, but at the end of the day we are sometimes able to "verify" only a nominal amount of what we earned. That is why lenders and insurers have created a "stated income" program for those finding themselves in this very position. The stated income portion (that is submitted to a lender) must be reasonable based on the industry, length of operation, and type of business.
Business-for-self applicants are required to demonstrate at least two full years of operation of their business. Currently, the minimum requirement for down payment is 10% for any purchase, and if refinancing - you must leave at least 15% equity in your home (85% Loan-to-value). The Business-for-self applicant must provide the following for documentation: Documentation/information requirements:
A one-owner operation where the owner directs all the activities of the business, assumes all authorities and obligations, and is liable for its business debts. The sole proprietor income is reported to revenue Canada on the standard tax return (T1 General) together with Revenue Canada's required statement of business or professional activities.
Partnerships are businesses owned by two or more individuals who share the profits or losses of the business operation. The partnership income is reported to Revenue Canada on the standard tax report (T1 General) together with Revenue Canada's required statement of business or professional activities, which reflects the percentage of the NET income or loss for each partner of the enterprise.
A limited company or corporation is a legal entity, separate from the persons (all shareholders) who own it. The business can own assets, enter into contracts and conduct business transactions in its own capacity. The company is called limited because the liability of the shareholders is limited to their investment. All provincial Corporations must obtain articles of incorporation from the province in which they are registered or may be federally incorporated. The applicant's personal income will be reported by T4 from the corporation.
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