Categories: calgary mortgage broker, mortgage advice
A common myth that is very prevalent is that people who are self-employed, or who work on a
commission basis, can not get a mortgage/have difficult time getting a mortgage. While this myth is true in certain situations, it is not a universal rule. In fact, obtaining a mortgage when you’re self employed can be a very streamlined and simple process assuming that you have certain things in order. There are many people in Calgary who are self-employed who enjoy the same access to mortgage products that those who are not self-employed do.
Things Necessary to Obtain a Mortgage When Self-Employed
As previously mentioned, it is possible to obtain a mortgage when you are self-employed or on commission. If you are newly self-employed the process will be different than if you have been self-employed for a number of years.
If you are newly self-employed (under three years) it is important to have the following in order:
- An excellent credit rating – Lenders will look at your “beacon score” first, before assessing other things such as equity, assets, down-payment, etc. A score of 600 or more is considered “good”, while a score of 680 or more is considered “excellent”. Unless you have a significant down-payment your credit will need to be very good. If it isn’t, you can raise your score by maintaining a low balance on your credit cards, paying more than the minimum payments on your loans, and reducing your overall debt to income ratio by eliminating debt. Unfortunately, this process does take time.
- Your last two NOA’s (Notice of Assessment) from Canada Revenue Agency – Your NOA is your proof to the lender that you have filed and paid taxes on the income that you are presenting to them. In many cases you will need to ensure that you have your last two NOA’s (at least), and that the income shown on your NOA matches what you are presenting to the lender, but with stated income mortgages offered by some lenders if your NOA’s do not match its not game over.
- A down payment – Unfortunately, most (if not all) lenders will not lend to someone who is self-employed without at least 5% of the purchase value as a down-payment. If you have excellent credit, a 5% down-payment should be sufficient (assuming you don’t have a large debt overhead). If your credit rating is still good (over 600) but not as high as it could be, a down-payment of 10% or more may be required.
If you have been self-employed for a number of years, and have maintained good credit, you will find that a good Calgary mortgage broker will be able to get you a mortgage without too much fuss. Remember, those who are self-employed are a larger risk for a lender since there is no guarantee of income.
What To Do If Your Local Calgarian Bank Turned You Down
You will find that banks do not like to offer mortgages to those who are self-employed as earnestly as they will to others. However, if you are using a mortgage broker who specializes in Calgary mortgages, your options are not as limited as they may seem. Remember, a bank is only able to offer you its particular set of products and services- this fact in itself can be very limiting. A mortgage broker is able to offer you a wide range of products and services that extend across a platform of multiple lenders.
If you aren’t sure if a mortgage broker will benefit you, read our article on what a good calgary-area mortgage broker can do for you.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!