Self-Employed Mortgages in Surrey
A self-employed individual is defined as someone who earns a living working for themself. They are not employees of others and do not own a corporation. A self-employed person conducts business as a sole proprietor or as an independent contractor.
In Canada, nearly 20% of all income earners are self-employed, at least part-time, according to a report. In comparison to employed individuals, self-employed individuals have a different method of declaring their earnings. Therefore, their declared net income is often not large enough to qualify them for a regular mortgage at lending institutions.
There are several benefits to being self-employed, and with the growing number of individuals declaring themselves as self-employed, it stands to reason more people would like to manage themselves in a professional setting. Some of the advantages of being your own boss include– setting your own working hours, growth opportunities at your own pace, writing off business expenses, and qualifying for tax benefits and rewards.
Concerning tax write-offs, self-employed individuals can include business lunches, transportation expenses, among others. This way, you can save thousands of dollars a year in income tax. However, with the mentioned benefits, there are disadvantages.
Due to the change in mortgage rules, it has become harder for self-employed people to qualify for mortgage financing through major lending institutions. Despite having their personal and business accounts at the particular bank, their mortgage applications are often rejected.
Benevolent Bancorp, professional mortgage brokers in Surrey, British Columbia, is experienced in providing support to get a mortgage secured without paying enormous tax payments to Revenue Canada.
In cases where self-employed income is being considered, a stated income mortgage would best suit the individual. We work with several lenders who do not need an extensive credit check compared to the big banks. In such cases, the borrower can use a stated income mortgage to finance or purchase a house, home renovations, travel, education, among other expenses.
At Benevolent Bancorp, we have access to both national and local lenders across Canada. We work with private, alternative mortgage lenders and including the major banks.
The drawback of being a self-employed worker is that you may find it extremely difficult to get approved for mortgages. This is even if you are a AAA client. As a self-employed individual, you may be reporting income in non-traditional ways to save on income tax, and therefore the major banks will often put you through difficult loops.
Compared to a salaried employee, getting a mortgage approved from banks can be harder and more stressful for self-employed workers. This is because lenders require documentation from borrowers when applying for mortgages. Documents such as T4 detailing their annual income are only provided to employees, and therefore you will need to provide a Stated Income Application. A stated income is a document highlighting an individual’s income stream, which will need to be supported by other documents.