A lot of us dream of being our own boss. Whether it’s to pursue a dream, to have more flexibility in your hours, or it’s something that started as a hobby and got bigger, many of us have excellent reasons for being self-employed.
One of the drawbacks of being self-employed is that it can be challenging to get a mortgage. Traditional lenders are not always willing to lend money to self-employed people, as they don’t necessarily have a steady income stream. Traditional lenders may see them as too risky.
The good news is there are options if you need a self-employed mortgage in Mississauga or elsewhere. At sMp mortgages, we want to help you get a mortgage that works for you.
You can do several things to help ensure that you get approved for a self-employed mortgage in Mississauga. We’ll tell you all about them:
- Put aside as large a down payment as possible.
- Keep your credit in good shape.
- Make sure your taxes are all filed and paid.
- Have paperwork to show all your income.
We’ll also tell you how sMp mortgage can help you get a self-employed mortgage at the best rate.
Put Together a Large Down Payment
Before you start shopping for a self-employed mortgage in Mississauga, you should have as much of a down payment as possible put aside. In Canada, the minimum down payment you have to put down is 5 percent.
However, as someone self-employed, lenders will always be more comfortable lending you money if you have more than 5 percent to put down. A higher down payment not only means you’ll have to borrow less money in the first place, but it also means you’ll be eligible for better mortgage rates and less restrictive mortgage terms.
Keep Your Credit in Good Shape
One way to help prove to lenders that you’re a safe bet for a self-employed mortgage is to make sure that you have a good credit rating. Having a good credit rating shows lenders that you are reliable at paying your debts. It may also help you qualify for a lower mortgage rate.
If you aren’t sure what your credit rating is, you should check it out before getting a self-employed mortgage. If your credit score isn’t very high, you can raise it by:
- Paying off your credit card debt
- Paying all your bills on time
- Settling any bills that have gone to collections
After you’ve done all of these, it may take a few months or longer for your credit score to reflect your actions.
Make Sure Your Taxes Are In Good Shape
If you want a self-employed mortgage in Mississauga, you’ll also need to make sure your taxes are in order. It’s much more complicated to file taxes if you run your own business than if you’re an employee, so you may want to get help from an accountant.
Having your taxes in good shape helps show potential lenders that you can be trusted to appropriately declare your income and pay taxes on it as needed. It also helps give you another way to prove your income, which we’ll talk more about this in the next section.
Find as Many Ways as Possible to Prove Your Income
If a company employs you, you can simply ask for a letter showing your salary or bring your most recent T4 slips to show a lender. If you want a self-employed mortgage in Mississauga, that’s a different matter.
One of the best ways to help make sure you’ll qualify for a self-employed mortgage is to have as many ways as possible to provide your income. Here are the different ways you can prove how much you make:
- Provide a lender with your last three Notice of Assessments. A Notice of Assessment is what you receive from the government after they have processed your tax return. It will list your income for each year on it.
- If you pay GST or HST, bring your CRA Statement of Account to show that you are up-to-date on your taxes.
- Business account bank statements can prove you are regularly depositing income.
- Any paperwork that proves you have guaranteed income
- Details of any other assets including your RRSP, bonds, and stocks
It may seem like a lot of work to get all of this together, but having all of this proof will make it much easier to help you qualify for a self-employed mortgage in Mississauga.
How can sMp Mortgages help you get a self-employed mortgage in Mississauga?
One of the areas we specialize in is self-employed mortgages. We are much more flexible than traditional banks and understand that just because you’re self-employed doesn’t mean you’re not a responsible loanee.
We’ll work with you to make sure you know what kind of information you need to qualify for a self-employed mortgage in Mississauga, and we’ll shop around to make sure you get the best rate.
We can walk you through any questions you may have, such as:
- Can I still get pre-approved for a mortgage if I’m self-employed? What kind of interest rate will I have to pay?
- Can I still qualify for a mortgage if I don’t have a very high reported income?
- Will I only be able to get a small mortgage because I’m self-employed?
While it may be more work to get a mortgage if you’re self-employed, it’s not impossible. We’ve given you some great tips to make sure you’re likely to qualify:
- Save a sizeable down payment.
- Make sure your credit is in good shape.
- Have all your taxes filed and paid.
- Organize your paperwork to prove all your income.
To learn more about how to get a mortgage if you’re self-employed, call sMp Mortgages at 1 855 915 5139 or contact us here.