Mortgages for the Self Employed

We offer excellent options and low-rate mortgages for self employed in Ontario.

Almost 20% of all income earners in Canada are self employed at least on a part-time basis. While being self employed offers a number of benefits, getting a mortgage is not one of them, as tax returns make it more difficult to qualify for the right mortgage loan that you deserve.

Mortgages for Self Employed in Ontario are Possible!

There are more choices for self employed mortgage products that you might think. The fact is that in Canada, we have “lending tiers”. Most of the mortgages qualify for the type A lenders, through proof of income and credit score.

To be eligible for an A lender mortgage, you will need the following:

  1. The required equity or down payment.
  2. Proof of income or suitable employment.
  3. A good credit rating.

B Tier Mortgage as an Alternative

But what should you do if you are only meeting two out of three criteria? You have enough funds for down payment and a good job, yet a poor credit history? In this case, you may qualify for a B tier mortgage. Many lenders that offer A tier mortgages, also provide B tier mortgages, which normally have a slightly higher interest rate and require a greater minimum down payment.

Furthermore, there is always a private lending option. Generally, private lenders are wealthy individuals who have their own company that lends money to consumers. However, they typically offer shorter-term loans at higher rates.

Just like with any other mortgage, there are specific terms and conditions associated with B tier mortgages. It all comes down to what you are willing to accept to move into your own home and finally stop paying a landlord. Remember, you are not required to stay with a B tier mortgage forever! Many home buyers use private lenders and B tier in the short term until they meet the criteria to transfer to an A tier mortgage.

Getting a Mortgage when Self-Employed has its Challenges

Mortgages for Self employed in Ottawa | Mortgage Broker Ottawa

So what should you do if you are self-employed, have saved enough money for a down payment, have a good credit history, yet have difficulties showing your net income? There is an alternative that is easier for self employed, called “non-conforming lenders”. When we think about A lenders, most of us usually remember the big banks, such as BMO, TDCT, HSBC, TBC, BNS, and CIBC. However, there are also Monoline lenders that provide A tier mortgages, but also deal with mortgages that are not as simple - mortgages that are possible even when there are challenges showing income. Such Monoline lenders are truly client driven, and they focus exclusively on mortgages. They usually offer better terms, rates, and penalties, and won’t be offering you to open new accounts and purchase other products. Monline lenders present a great alternative for mortgages for self employed in Ontario.

Self Employed Mortgage Application

In order to give out mortgages for self employed in Ontario, lenders will require personal tax Notices of Assessment over the past 2 to 3 years to be included alongside with the mortgage application. Applicants who are able to provide these notices as a proof of income will generally be able to secure mortgage options similar to traditional borrowers, while those who aren’t must be able to provide a minimum down payment of 10% and show a good credit history.

In addition to Notices of Assessment, other supporting documents may be required for the application for mortgages for self employed in Ontario:

  • Proof that your GST and/or HST are paid in full.
  • Your business financial statements.
  • Contracts showing estimated revenue in the following years.
  • Proof that you are a principal business owner.
  • Your business and personal credit scores.
  • Proof that your down payment has not been gifted.
  • Article of Incorporation showing that you are licensed or a copy of the borrower’s GST or business licence.

Self Employed Mortgage Rates: Default Insurance Rates

If you are able to prove your income through your tax Notices of Assessment, the mortgage insurance would work exactly the same way as for a traditional mortgage: you will have to pay a premium if your down payment is 5% - 19.99%, and won’t have to pay it if you can put down at least 20%. In this case, the premium will be added to your mortgage to be paid off alongside with the loan.

Self Employed Mortgage Default Insurance Rates with Proof of Income

If you can prove your income, all mortgage default insurance providers in Canada (Genworth Canada, Canada Guaranty, or Canada Mortgage and Housing Corporation (CMHC)) offer the following rates.

Insurance Premium Percentage:

  • 4.00% for 5% - 9.99% down payment
  • 3.10% for 10% - 14.99% down payment
  • 2.80% for 15% - 19.99% down payment
  • 0.00% for 20% or higher down payment

Self Employed Mortgage Default Insurance Rates without Proof of Income

In case you are not able to provide acceptable proof of income, you will have to use a lender who uses either Canada Guaranty or Genworth, as these are the only two providers who offer mortgage default insurance for stated income files. You will also have to put down a minimum 10% down payment.

Insurance Premium Percentage:

  • 5.45% for 10% - 14.99% down payment
  • 3.35% for 15% - 19.99% down payment
  • 1.90% for 20% or higher down payment

Why Contact a Mortgage Broker for Self Employed Mortgage in Ontario?

If you choose to deal exclusively with your bank, you are not going to receive the advice and the access to alternative lender options that you will get when you work with a mortgage broker in Ontario. Only brokers can offer mortgages from Monoline lenders, so you will never hear about them from your bank institution! A good mortgage broker will design a strategicplan, depending on your goals and needs, prior to presenting you with possible options. Your broker should also understand well all the conditions, terms, and penalties for mortgages for self employed in Ontario, and what effect they will have on your long-term financial goals.

Choose KeyRate to Find the Best Mortgage Provider for Self Employed in Ontario

I work with various mortgage lenders and financial institutions that offer great mortgages for self employed in Ontario. These lenders have experience working with self-employed people and understand that they have tax write-offs, resulting in significant reductions in the declared income. When you choose to work with these lenders, the proof of income will not be required, and a reasonable estimate will be sufficient.

Contact us today for the best rates, mortgage advice and a FAST mortgage pre-approval!

What's Next?

We also offer:

  • Mortgages for self employed in Ottawa
  • Mortgages for self employed in Vancouver
  • Mortgages for self employed in Victoria
  • Mortgages for self employed in Calgary

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