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Business for self or self-employed income is becoming commonplace in Quebec. Yes, there are some risks involved, but the rewards are well worth it.
But when it comes to qualifying for a mortgage, it can be a bit more complicated! Since the bank views the self-employed client as a little riskier compared to a salaried person, they will be more stringent in their income verification process. One of the main reasons that a self-employed person can be refused is due to their tax returns. The bank wants to see a minimum of 2 years of Notice of Assessments. It will then average out the 2 last years and add + 15% to income. If you only have one year of working for yourself, you will not be able to qualify with traditional lenders, but there are other financing options available.
If you have 25% and up for a down payment, there are chances of obtaining mortgage financing and even alternative financing. Not all lenders are created equal. Some will accept verbalized income if they can see significant cash flow in your bank accounts for at least the last 6 months. If you have between 20% and 25% down payment, there might be alternative financing solutions available, but this is on a case-by-case basis.
Self-employed person refused for mortgage loan because of credit:
You can be refused a mortgage loan due to low credit rating or certain debts that are currently in collections. An in-depth analysis of your credit score will help determine the next steps in order to establish the right strategy for correcting defaults, such as:
Once these issues have been addressed, a certain amount of time will be required for your credit rating to go up and for you to requalify for a mortgage.
If it is an absolute must for you to move into your new home today and you have the appropriate amount of down payment and incomes, we can make it happen for you!
Does the scenario below sound like your situation?
You are self-employed working in the trucking industry. You currently rent a house because of your credit and because your notice of assessment does not reflect your true earning potential. You have found a great deal: you absolutely must have this house! It has a good amount of land and it has a huge garage in the back where you can store all your trucks and equipment. Due to the rent and the storage you pay every month; it costs you an arm and a leg. You tell yourself that if you could buy now, even if the mortgage costs a little more, you would probably save hundreds of dollars monthly because you would have only 1 payment and you would save on the cost of the storage! What can be done to help you in this current situation?
There are certainly possibilities available to you! If you have a down payment of 25% or more and your income is adequate, even if you have declared a low amount of income the previous year, so long as you can show us 6 months worth of bank statements that show that you generate good cash flow, we could help you buy that home and arrange your finances so you can return to a traditional bank in 1 to 3 years!
For more information or to take the first step towards resolving your situation, complete our online form right now! You will be glad you did!