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  • Being your own boss has its ups and downs and usually it takes many years of dedication both mentally and financially to establish a business. Although rewarding, by the time you get to this point many others your age have been established in their respective careers for a few years and could be into their second property purchase already.

    As the world becomes more and more technologically advanced, the percentage of the work force in Canada that is business-for-self grows every year. The benefits of not having a boss, controlling your own hours/vacations and being able to decrease your income tax payable every year, seem to out weight the negatives.

    The down side: since the economic down turn is 2008, and the tightening of the mortgage lending rules, being self-employed is one of the tougher hit professions when it comes to qualifying for a great mortgage. The regulators require traditional mortgage lenders to verify that all self-employed mortgage applicants have good credit history and are stable in their career for at least two or three years by way of tax returns to verify the income as stated on a mortgage application.

    There are many traditional mortgage providers that still offer great programs for self employed.

    If a self employed applicant cannot fit the traditional mortgage lending guidelines there are many sub-prime lenders that offer specialty mortgage programs that have the flexibility to qualify self-employed applicants based on reasonable credit, your accredited status, an accepted job offer, value of an existing business you are taking over, or your own.

    Example

    A consultant claims $60,000 annual income and wants to borrow for his down payment but is not up to date with Revenue Canada for unpaid income tax. 

    All traditional mortgage lenders: would not even look at his application until he paid out his taxes. Even then, based on his lender’s qualifications, he couldn’t get approved for the home he wanted to purchase.

    A sub–prime lender approved him: we were able to place financing for him based on his before-tax income of $160,000 a year, this allowed him to also borrow for his down payment, plus he didn’t need to pay out his income taxes!