Self-employment is a growing trend in Canada, with nearly 13 percent of the total workforce being made up of self-employed individuals. However, self-employment can come with its own set of unique challenges, particularly when it comes to securing a mortgage. Traditional lenders may not be as willing to offer a mortgage loan to self-employed Canadians, making it difficult to purchase a home or refinance an existing mortgage.
Fortunately, there are still mortgage options available to self-employed Canadians. Here are some tips to help you explore your mortgage options and find the right fit for your needs.
1. Gather the Necessary Documentation
When applying for any mortgage, you’ll need to provide a variety of documents to show proof of income, assets, and debts. As a self-employed individual, you’ll need to provide additional documentation to prove your income. This could include tax returns, bank statements, and financial statements. It’s important to have all of this information ready before you start the loan process.
2. Consider Alternative Lenders
Traditional lenders may be less likely to approve a loan for a self-employed individual. However, there are alternative lenders that specialize in providing loans to self-employed Canadians. These lenders understand the unique challenges that come with being self-employed, and can provide more flexible terms.
3. Shop Around
As with any loan, it’s important to compare different lenders and their rates to find the best deal. Be sure to read the fine print and understand all of the fees associated with the loan. You may also want to use a mortgage broker to help you compare lenders and find the best deal.
4. Choose the Right Loan Type
Mortgages come in a variety of different types and terms. It’s important to choose the right loan type for your needs. Consider the length of the loan, the interest rate, and other factors such as whether you want a fixed or variable rate.
5. Consider Refinancing
If you’re already paying off a mortgage, you may want to consider refinancing to get a better rate and lower your monthly payments. Refinancing can be a great option for self-employed Canadians, as it can help you save money and reduce your debt.
Self-employment can come with its own unique challenges, but it doesn’t have to stand in the way of your dreams of owning a home. With the right preparation and understanding of the options available to you, you can find the right mortgage loan to meet your needs.