For years it was almost impossible for self employed or commissioned sales people to get financing for a home. Problems consists of
1) Onerous and Intrusive demands: Years of financial records, tax returns and other paperwork made it difficult, if not impossible, to get a mortgage.
2) Fluctuating incomes: Canadians with fluctuation incomes were treated as high risk clients and the amount of mortgages they were offered were far below what they could afford to pay or wanted.
3) Not a long enough history: Business owners and commissioned sales people that had not been in business for 3-4 years could not provide the required documents whereas employees need only be at their jobs a few months.
4) Taxable Income Too Low: Many self employed and commissioned sales people write off a portion of their gross income with legitimate tax deductible expenses. This can make their net operating incomes look too low for the lenders. The problem then becomes, “If I write off all my legal expenses so I pay the least amount of income tax, the lenders won’t like my net income, and if I don’t claim all my legal expenses I will have a higher income that the lenders will like, but I will pay unnecessary taxes. Either way I have a problem.”
Finally there is an answer, No Income Verification Loans
Due to the highly competitive nature of our mortgage market, there are lenders that offer mortgages specifically designed for self employed and commissioned sales people. These lenders were smart enough to realise that there is a huge need for this type of product considering the high number of self employed and commissioned people in Canada.
No Income Verification loans mean exactly that. They resolve the 4 problems mentioned above.
1) They eliminate most of the documents required making it easier, faster and less intrusive to get a mortgage.
2) Fluctuating incomes from past years are not even looked at.
3) A long business history is not needed as years of financial statements are no longer required. Some lenders like to see that you have been operating for 2 years, but do not need a financial history.
4) Taxable income too low; these mortgages are granted on stated income rather than net taxable income. This allows you to continue to use all legal means possible to reduce your income taxes without hurting the possibility of qualifying for a mortgage.
New products – Bigger mortgages
Up to 90% Financing
As more and more Canadians move from traditional employment jobs to self employed or commissioned jobs, the mortgage market is motivated to develop more products.
Up until recently No Income Verification mortgages were limited to a maximum of 75% of the value of the property. Now that GE insurance has joined the market and provided mortgage default to lenders on No Income Verification loans, we are seeing loans as high as 90% of the value and still with No Income Verification.
Finally, self employed and commissioned sales people are being treated with the respect they deserve, fast and easy approvals and good discounted rates.