Being self-employed has many benefits, and it may also give you financial freedom, but unfortunately, it often makes it a bit harder to apply for a mortgage. While you can enjoy tax benefits and live a great lifestyle, you need to know how to successfully apply for a mortgage. It’s often a good idea to speak to mortgage brokers in Oakville for tips and advice on how to qualify for a mortgage.
Benefits of Being Self-employed
One benefit of being self-employed is that your income may be higher. This is because your income can grow as your business grows, which is why so many people start their own venture. But with so many deductions and benefits that come with your income, your salary might look reduced on paper, which can be an issue when applying for a mortgage.
You also may have great tax write-offs as a self-employed individual, and as such may not even have to pay for medical. This is only one part of the great lifestyle you can live when self-employed.
In Canada, almost three million people are self-employed, which is more than 14% of the population. It’s a great way of earning an income even though it’s not always a conventional one. But lenders want you to meet certain criteria before you can be approved for a mortgage.
Applying for a Home Loan
If you want to improve your chances of being approved for a mortgage, there are a few tips to keep in mind to help show a higher income. Here are a few guidelines:
- Write off fewer expenses. Although you may pay more taxes, it may help you in the near future. Having more disposable income is essential when applying for a home loan.
- Use a certified accountant. Work through an accountant to set up your finances. It’s easier for you and will ensure that everything, including your taxes, are worked out correctly.
- Know about stated income. Stated income will be assessed by your lender in a few ways. You need to be in the same industry for at least two years prior to your application, for example. Your stated income can be complicated and you’ll need documents such as bank statements.
As a last resort, you can also consider private financing. It may be more expensive, but it will nevertheless give you a mortgage. Just make sure you are aware of all the terms and never agree to a loan that you know you won’t be able to comfortably afford. Private funding is not necessarily a long-term solution, however, it can help you with the mortgage you need.
As leading mortgage brokers in Oakville, Mortgage Guys can help you to apply for a mortgage if you are self-employed. We can also help you with second mortgages, reverse mortgages and even debt consolidation to reduce your debt payments.