Self employed mortgages in Canada – updated

In november of this past year the government instituted significant changes for self employed mortgages that affected all banks in Canada.  The core push behind these changes was unfortunately not centered around the past performance and history of lenders’ existing programs for self employed mortgages, rather it was based upon the government’s perceived risk factors.  As an unfortunate result the common sense mortgage lending options for self employed clients became somewhat narrower.  That being said I am a firm believer in one door closing and another opening and that is exactly the case for self employed mortgages – we have many remaining strong options.

The fundamental that must be recognized is that mortgages are build as a combination of your down payment, credit, and income.  In the case of self employed mortgages, this is even more applicable as we often require lender flexibility in terms of our declared income, the question then is what are we offering the lender in terms of credit and down payment to compensate for this flexibility?  I have listed below a brief guide for these unique lending options with the assumption that we don’t personally declare enough income and are requiring added flexibility:

A quick guide to self employed mortgages:

• Option One:
  • 10% down payment from your own funds
  • Strong credit
  • Income reasonability test
  • Advantage: great rates and terms
  • Disadvantage: large CMHC insurance premium
• Option two:
  • 15% – 20% down payment
  • Average to good credit
  • More flexible income reasonability
  • Advantage: limited or no additional default insurance costs
  • Disadvantage: good but not great rates
• Option three:
  • 35% down payment
  • Average to good credit
  • very limited or no income reasonability
  • Advantage: great rates and terms
  • Disadvantage: higher down payment

We are experts in obtaining self employed mortgages in Canada.  We do this by working closely with our clients to understand their unique goals and businesses and then leveraging our strong lender relationships to ensure excellent mortgage results.

Please feel free to contact me directly so that we can ensure that we stack the deck in your favour for your self employed mortgages.

Rylan Hahn 403-802-7201