Mortgage Broker Tim Lacroix can help
Entrepreneurs are motivated, tenacious and smart individuals. So why are banks reluctant to provide mortgages for the self-employed? The reason is due to their different and various forms of income.
Most salaried employees are able to prove their income by providing their brokers with a T4 form. Where the self-employed must provide tax return records, financial statements and company contracts. Since entrepreneurs have changes in their client base and irregular income throughout the fiscal year, it’s more difficult to accurately account for one’s annual income.
Mortgage rules and procedures have changed over time. They currently require lenders to research the entrepreneur’s industry and the average salary of those in the field. The entrepreneur’s stated income needs to fall in line with this research. Once the appropriate salary is determined, banks will review all tax and financial documents of the self-employed applicant. Today, banks are observing where the self-employed are writing off expenses. This is where financial statements are useful. They detail which items were written off; for instance, a company vehicle.
Calgary mortgage broker, Tim LaCroix, recommends these helpful tips to alleviate some of the issues applying for a mortgage when you’re self-employed:
Tip1) Make sure you’re financially ready. Pay off your debts, or at least pay them down significantly and put money aside for your downpayment.
Tip 2) Organize all your required documents. This includes three year’s worth of taxes, detailing your income, taxes paid and all items you’ve written off. Any and all sources of revenue should be provided and accounted for.
Tip 3) Longevity will pay off. Being able to illustrate that you’re stable and consistent in your field provides credibility to lenders. Being unpredictable can really hinder your chances of obtaining the mortgage.
If you’re self-employed and looking to buy a home, consult with mortgage broker Time LaCroix today at 403.648.1541.