Follow These 5 Mortgage Tips as A Self Employed Home Buyer
posted in Mortgage News
Being self-employed can be a great way to earn a living doing the things you love or are great at (or both), and for as many as 13% of Canadians, that’s exactly what they’re doing. However, many believe that being self-employed prohibits them from being approved for a mortgage, or at the very least, makes it much more difficult for them. The reality is though, that it’s absolutely possible for a self-employed Canadian to find a great mortgage deal, they may simply have to jump through a few more hoops to get it.
If you’re a self-employed Canadian looking for a mortgage, here are five helpful tips to prepare you for the process:
1. Hold on to all records of your sources of income
If you’re making money as a self-employed person and can prove it, then mortgage lenders will naturally view your application favorably. Ensure that your flow of income is well documented (this can include bank statements and contracts or agreements, for example) and easy for lenders to verify.
2. Maintain a good credit score
Having a good credit score is important to lenders and they’ll use it to evaluate your application. Here are a few ways that you can maintain a good credit score:
- Pay your credit cards in full, and on time
- Try to keep the usage of your credit limits to 30% or less
- Where possible, avoid hard inquiries on your credit history
3. Save as much as you can for a down payment
When you save for a larger down payment, you can increase the value of your interest – or equity – on your home, which will go on to give you a wider range of financing options you may qualify for. Saving for a big down payment is no mean feat though, and requires a lot of planning and commitment.
4. Try and reduce your debt
Reducing the number of monthly payments you make is always a good idea when applying for a mortgage, and you can achieve this by paying off the balance on any existing loans. Doing so will free up some cash flow, and make it far easier for you to service your mortgage.
5. Seek professional advice from a mortgage broker
As licensed professionals who often have a great deal of experience behind them, mortgage brokers can be immensely helpful when applying for a mortgage, especially as a self-employed person. By understanding your entire financial history and current circumstances, they’ll work closely with you, and lenders, to get you the very best mortgage deal. They’re familiarity with the local housing market enables them to give you the most accurate and up-to-date advice, and they’re unique relationship with local lenders, could get you access to deals you may otherwise have known nothing about.
By following the 5 steps above, you can have a positive mortgage experience as a self-employed person, and find your dream home just as quickly as anyone else.