Self – Employment and Access to Mortgages
Being self-employed is something that is admired by many people. It comes with a lot of benefits and conveniences. You do not have to stick to a certain dress code; you are your own boss; you get to have a flexible schedule. One of the greatest benefits is that you do not have a fixed salary. Your income is determined by how hard or smart you work.
Another advantage for self-employed people is they enjoy more certain benefits with respect to tax deductions, and flexibility as to when they file their tax returns. They can enjoy more tax write-offs than their employed counterparts, and, if incorporated, choose a specific month that they want to file their corporate returns. One shortcoming, however, is that getting mortgages for self-employed people can be tricky.
Mortgages for Self – employed in Brantford
Brantford in Ontario, Canada is a typical city where many people are self-employed or wish to be self-employed. For these people it can be harder to get approved for a conventional mortgage. Some tips and pointers to consider when trying to get a mortgage as someone who is self-employed in Brantford are outlined below.
- Tax Returns and True Income
Self-employed people have the advantage of enjoying certain tax write-offs for their businesses. It is not unusual, therefore, to find that the income that self-employed people file as their net income with the Canada Revenue Agency, CRA, is a lot different than the gross income that they earn in their business. The problem comes when they want to get approved for mortgages. The lender will invariably qualify them for a mortgage partly based on the tax records filed with the CRA, which often reflects a lower net income. This is why a lender will sk a person who is self-employed for their tax records in order to see what their gross AND net income is to make sure that the mortgage is affordable.
- Standards for Lending to Self-Employed are high
Most lenders will require self-employed borrowers to show tax returns dating back two years or more. While there is a great advantage to being self-employed, when it comes to getting a mortgage it can be tricky to get approved.
- Some Lenders are Flexible
Some lenders specifically provide mortgages for self-employed in Brantford as they understand specific needs kinds of borrowers. Their terms may allow for adjustments when qualifying a mortgage and can add back certain deductions as income that show on a self-employed client’s tax returns. (A good accountant should be able to advise you on the kinds of tax deductions which may be added back, or contact us today).
- Planning in Advance
It is advisable for people who are self-employed who need mortgages to plan well in advance in order to avoid any pitfalls and delays. Planning and keeping your finances organised at least 18 to 24 months in advance is very important and will avoid all kinds of headaches and challenges when you apply for your mortgage.