Insight on how to find self-employed mortgage solutions in Pickering, Ontario. If you’re self-employed you may be overwhelmed by the different types of mortgage options out there. To help you kick-start your application, we’ve rounded up a handy self-employed mortgage solutions guide.
From what documents you need to the difference between being salaried and self-employed, we’ll help you get one step closer to homeownership. Whether you’re self-employed or have different forms of income, we’ll work together to help find the best mortgage options for you.
Find Self-Employed Mortgage Solutions in Pickering Ontario
As someone who is self-employed, there are a few different documents and items needed to get approved for a mortgage. As a salaried or hourly employee with a paycheque, for example, you’re given a steady income each week or month. You can easily show this income on a pay stub or year-end tax statement.
When you’re self-employed, it can be difficult to map out on paper just how much income you take home annually. You may receive payments in cash or from multiple clients. You may also get paid through a third party such as PayPal or Amazon. While it’s certainly possible to provide proof of income, it’s not always easy to put together all that information.
When you’re applying for a mortgage, the idea is to show as steady of an income as possible. So even if some months you’re making a lot more, you’ll want to go with your baseline or average monthly income. This will help make sure you are getting a mortgage that you can afford to make monthly installments on.
Gather Your Income and Employment Information
When you apply for a self-employed mortgage, you’ll need to gather a few key pieces of information. In addition to the basics such as your Social Insurance Number and current address, you’ll also need your tax statements. Because your income doesn’t always come in the form of a salary, you’ll need to prove how much you make each year.
In addition to your year-end tax statements, you’ll also want to gather all of your income statements. This can be copies of electronic payments, yearly bank statements, or contracts with proof of payment. Invoices are helpful in showing a lender just how much your services are worth.
The more documentation you can provide the easier it is to obtain alternative financing or a mortgage. Essentially, the stated income you’re listing on your application needs to match what is coming in each month.
If you have multiple years of tax statements showing your income each year, this will also help. If you’re co-signing with a spouse who has a salaried position, these incomes are combined to get your final approval. You’ll need their basic information as well as an employment letter and paystubs.
Put an Income and Budget Spreadsheet Together
Before you apply for a self-employed mortgage, it’s always a good idea to create an ideal monthly budget. To start, list out all your current income and expenses. From your car payment to your monthly music subscriptions, everything should have a line item.
To make sure you’ve recorded all your expenses, you’ll want to go through all your bank and credit card statements. If you don’t have a visual of your monthly expenses, it’s hard to get a realistic idea of what you can afford to pay on a mortgage.
Next, go through each bill and take a look at where you can make cuts if needed. There may be things that you are paying for that are no longer required or you may find that you are overpaying for certain services. You’ll be surprised at how much money you can save by cutting out unused expenses.
Once you have your budget written out, take a look at what you have left for your new home. In addition to your mortgage, you’ll also have insurance, property taxes, and utilities to factor in. Your new home may also come with condo fee dues. Keep this figure in mind and see how it matches up with your income.
Start Applying for Your Self-Employed Mortgage
Once you have your budget and paperwork in order, it’s time to start the application process. Because you did a little homework ahead of time, this process will go a lot smoother. Having your budget on hand will also help you stay within your target monthly payment.
The application process will begin by gathering the basic information you’ve collected. Your lender will run your credit and verify your income. Your credit score will factor into what interest rate you receive. The higher your credit score the better loan terms you’ll have.
Once you’ve finished your initial application, you’ll receive a mortgage pre-approval. If more information is needed in order for you to get approval, your lender will let you know. If you’d like a mortgage that’s higher than the pre-approval you received, you’ll likely need to go back to your mortgage broker to help aid in your quest to borrow more money.
As a self-employed person, you may need to show your income on various levels to provide proof of what you can pay. Your pre-approval is then used to help you find your next home. A seller will be more likely to accept your offer if they see you’ve been pre-approved.
The Best Self-Employed Mortgage Solutions in Pickering Ontario
As a self-employed person, there are still plenty of self-employed mortgage solutions for you. From gathering your income information to creating a budget, these tips can help your approval process go smoothly.
Get the right help with mortgage renewals, accessing home equity, or even first-time homebuyer mortgages. As Durham Region mortgage brokers there are several programs we have access to. If you’re ready to start your self-employed mortgage application, fill out the application form here. You’ll be one step closer to achieving your dream of homeownership.
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