Why Self Employed Professionals Should Partner With a Mortgage Broker When Buying a Home
The Penticton BC labor force is an enterprising bunch. Recent data shows that over 13 percent of Penticton’s “people power” identifies as self-employed. And while the events of the past year hit many entrepreneurs quite hard, it has also created growth in the category. A number of individuals who lost their job were forced to find income on their own, and in many cases it created an opportunity to become more self sufficient as a freelancer. Others who maintained their jobs switched to a remote working environment, yet also found that they could spread their wings and do it on their own. At the same time, some businesses that have maintained a remote workforce through COVID have given staff the option to keep working from home as contractors. All in all, a greater number of professionals will come out of 2021 as self employed contractors and enter 2022 (and beyond) with their destiny in their own hands.
But for all of the benefits of being self employed, there is one concern that many have – getting a mortgage. People assume that because they don’t have a consistent wage/salary with a corporate watermark on it, that lenders will consider them to be high-risk. It’s true that getting a home loan as a contractor may be a challenge when dealing with some single-minded institutions. However, when you work with a mortgage broker your options grow exponentially. Here’s what you need to know.
We Connect You to Lenders Who Want Your Business
Buying a home in the BC Southern Interior? Carloni Mortgage Brokers has a long list of both institutional and private lenders in BC and throughout Canada that offer excellent home financing options for self-employed residents. With these mortgage lenders, you do not have to produce traditional employment letters nor stuff an envelope with recent pay stubs. To qualify for a mortgage, we work with you to show lenders that you can afford the amount you’re asking for. We leverage your financial information (including a reasonable estimate of your annual income) to show them that you can cover your monthly housing costs (less than 35% of your gross income) and total debt load (less than 42% of your gross income).
Ultimately it’s the bottom-line they care about, not who is putting your check in the mail every two-weeks.
We Connect New Freelancers to Home Loan Programs
As mentioned in the introduction, the events of last year have created growth in the self employed sector. That means there are a lot of new freelancers/contractors out there. As someone among them, you assume there’s no way a lender will consider you, right? Not at all, as things have changed a lot over the last few years.
Back in 2018, the Canada Mortgage and Housing Corp (CMHC) introduced a program to provide lenders with more guidance and flexibility when it comes to self-employed borrowers, offering more leniency for those who have been running a business for less than two years. This is great news for those who have recently transitioned to a freelance stance. Your business income can be proven by providing lenders with a notice of assessment accompanied by a T1 General tax form, a proof of income statement from CRA, and a T2125 form which is your statement of business or professional activities.
Most entrepreneurs entering the market for the first time have no idea about these sorts of programs and initiatives. It takes a lot of time and effort to uncover what’s available to you, time and effort that you don’t have as you continue to service your clients. When you work with a broker, you don’t have to lift a finger because we already have all of the intel you require. If you are a new self employed professional, find out of your qualify for all related programs by calling 250.493.9111.
We Help You Calculate (and find) What Counts as Income Towards Your Mortgage
As a freelancer, you enjoy income injections and expense reductions in a number of ways. For instance, as a contractor you have tax write-offs that the traditional labor force does not. That’s just the tip of the iceberg. However, figuring out what counts towards your mortgage on your own may be a challenge, unless of course you’re a self-employed financial services provider. For those who are not, a broker will help find what counts as “income” towards your home loan, which may include any of the following:
Liquidity of cash reserves
Past and current payments for goods and services rendered
Predictable earnings from the provision of future goods and services
Commissions and bonuses from clients
Rental income
Investment income
Grants
BC COVID support programs for small business (while applicable)
Other (alimony, child support, etc.)
We Get You Access to Preferred Rates
One of the biggest benefits of working with a broker comes down to what you will pay (or not pay!) each month towards your mortgage. A well-established broker has longstanding relationships with banks, lending institutions, and other financiers. We get “bulk discounts” (so to speak) so that we can offer our clients (you) lower and unadvertised interest rates that will reduce your monthly cash outflow and overall cost of the mortgage. As a savvy entrepreneur you can most certainly appreciate the financial benefit of partnering with a reputable broker. And while this will always be the case, we encourage you to act now while both fixed and variable rates are near historically low levels.
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