Self-employed individuals are facing an uphill battle when it comes to securing finances for the purchase of a new home. They could still succeed if they navigate the system skillfully – and we have a few good tips that could be of assistance.
Being your own boss has its advantages, but the downsides include difficulties in obtaining loans, especially for large sums. Getting a mortgage for a new home can sound like an impossible mission, as most lenders want to see proof of permanent employment. This is an obstacle that prevents many millennials from starting their own households, even if their careers are going fine.
If you fall into the category of self-employed professionals, don’t despair. With some groundwork, you should still be able to find a mortgage product you are eligible for. This is how to start:
Find a lender that accepts self-employed clients
There are quite a lot of institutions in Canada competing in the mortgage market, and a few are likely willing to consider self-employed applicants that meet certain criteria. It might take a bit of digging to find the right provider and the right mortgage, so don’t get discouraged if you get rejected at your first stop. A quick Google search can put you in contact with dozens of possible sources of mortgages in Guelph, and it won’t take you more than a few days to filter them out and identify those that might be willing to listen to you.
Keep your paperwork in pristine condition
Most freelancers are focused on their work so much they can get careless with their accounting, which can create serious problems when they try to get a mortgage. Keeping the books straight at all times is a good way to be prepared for filing your application in the future. It would be a tragedy if your application failed because of a few missing invoices and you want to eliminate this possibility completely. Consider having a knowledgeable person go through your papers with you before you go to the bank!
Work on your credit history
One common problem that many self-employed people face when they try to seek a loan is a total absence of credit history. While living strictly from your earnings is a commendable strategy in general, it actually reduces your access to lines of credit. Taking out smaller loans and servicing them in a timely manner is a prudent practice that will allow you to build a respectable credit rating, thus increasing your chances to get the mortgage loan you need.
Consider alternative financing methods
There are a lot of fresh ideas to consider if you fail to secure a traditional mortgage. Space-sharing startups are gaining prominence lately, while it isn’t beyond the realm of imagination to secure funding for real estate through a crowdfunding campaign. If you are able to survive as a self-employed worker in this economy, you are probably very good with digital platforms and know where to seek inspiration for a non-traditional financing structure.