Ang sabi ng Genworth Financial Canada¹, isa sa dalawang insurer ng mortgage default insurance sa Canada, 1 out of 4 households ay merong self-employed income earner!  Wow ang dami non!  Ang akala ng maraming self-employed, hindi sila makakabili ng bahay dahil sa nature ng kanilang trabaho at minsan dahil na rin sa mga naririnig nilang bali-balita.  Kaya naman natatakot na tuloy bumili ng bahay o lumapit sa bangko para magpa-approve.

Ang mortgage for self employed ay napaka unique dahil ang income na talagang kinikita nila ay hindi makukumpirma sa Notice of Assessments or tax return.  Siyempre kapag self-employed ka siguradong maraming write off sa income.   Ang tawag ng mga brokers or lenders sa income na dine-deklara sa kanila ng mga self-employed ay “Stated Income”.  So, sabihin ninyo sa akin kung magkano talaga ang pumapasok na pera sa inyo at kung iyan ay iba sa inyong notice of assessment maraming paraan para ma-justify ko na reasonable yung income na dapat nating gamitin para mag-qualify.

Ito ang mga dokumento na kailangan ninyong i-handa:

1).Notice of assessment. Ito yung dokumento na bumabalik sa inyo pagkatapos ninyong i-file ang inyong tax return.  Galing ito sa CRA o Canada Revenue Agency.  Kailangang patunayan natin na wala kayong utang sa inyong tax return… in short walang tax arrears.  Anything outstanding sa gobyerno ay kailangang i-fully pay ninyo.  Dito kasi sa Canada, may priority ang gobyerno sa inyong property kung may utang kayo sa taxes.  Ang gusto ng mga bangko, sila ang no. 1 pagdating sa inyong property at hindi no. 2 behind the government.

2). Tax return or T1 General (lahat ng pages kailangan ko)

3). Financial statements ng inyong kumpanya kung incorporated or partnership

4). Alinman sa mga sumusunod na dokumento na nagpapatunay ng inyong estado bilang self-employed:

• Business License
• GST/HST Return
• Certificate of Incorporation and Notice of Shareholders or Notice of Directors
• Financial Statements for the last 2 years

Importanteng ma-meet ninyo ang minimum qualifications:

1).  2 years continuous self-employment.

2).  2 years of credit history. Dapat at least dalawa ang inyong credit or ang common term ay trade lines.  Puwedeng kombinasyon ng credit card, line of credit, RRSP loan, car loan etc.

3).  Minimum credit score of 680. Lahat tayo ay may credit score kung meron tayong mga credit cards or loans.  Madaling magkaroon ng credit score na 680 basta wala tayong mga late payments sa ating credit.  Kahit maraming credit items, mataas pa rin ang ating score basta nagbabayad tayo sa nakatakdang  due date.

4).  Minimum 10% downpayment. Hindi puwedeng gifted or borrowed. Kailangang maipakita natin na yung pera ay naipon ninyo sa loob ng tatlong buwan.

Nitong mga nakaran, libu-libong self employed ang nakakakuha ng mortgage kahit hindi malaki ang kanilang nai-rereport na income.  Kung kayo ay self-employed at kayo ay nag-aalangan kung puwede kayong mag-qualify, bakit hindi ninyo subukan?

Tawag lang kayo sa 604-436-4600 ext 222 or email me at blaxamana@bcloansinfo.com.

¹ Genworth Financial Canada, The Homeownership Company, is the leading private sector supplier of mortgage default insurance in Canada. Genworth works with lenders, mortgage brokers, real estate agents and builders to make homeownership more accessible throughout Canada. The company combines global experience in mortgage insurance with technological and service leadership to deliver innovation to the mortgage marketplace.

Thanks for reading!

We welcome your questions and feedback.

Bernadette Laxamana’s Mortgage Blog

You can comment on this blog here.

If you or anyone you know is self-employed, we can help you and them get a mortgage.

According to Genworth Financial Canada¹, 1 out of 4 households has a self-employed income earner.  That’s a big number.  It’s common for self-employed buyers to assume that it is not easy for them to purchase a home due to the nature of their income and financial situation.  Also, there have been stories and rumors floating around that they would not qualify for a loan.  I wouldn’t be surprised if some don’t even bother getting pre-approved.

A mortgage for self-employed individuals is so unique since their income cannot be verified via traditional means. Also, they write off expenses reducing the total income that they could claim on their return.  Lenders normally call their income as “stated income”.  What this means is the borrower will state the income they realistically make per year before deductions. As Brokers we do our best to use that income and justify to the lender how reasonable the income is that we are using.

Here are the documents that we need to get the mortgage approved:

1). Notice of assessment (NOA for short).  Revenue Canada mails this to taxpayers after they have reviewed the income tax filing.  It is important that there aren’t any taxes owing for the most recent year.  Tax arrears have a priority over mortgages, therefore  Lenders would want this paid out before lending out any money.

2).  Tax returns or T1 General

3).  Financial statements of the company if it’s incorporated or the partnership financial statements

4).  These following documents may also be required:

- Business License

- GST/HST Return

- Certificate of incorporation and Notice of Shareholders or Directors

- Financial statements for the last 2 years

These are the minimum qualifications Lenders look for:

1).  2 years continuous self-employment. We need to demonstrate that the borrower has been operating their business for at least 2 years successfully.

2).  2 years credit history.  Since they are lending a huge sum of money, they would like the borrower to demonstrate healthy debt management.

3).  Minimum credit score of 680.  All of us have a credit score and it’s quite easy to achieve this score as long as credit cards, loans and other debts are paid on time.

4).  Downpayment of at least 10%. Mortgages for self-employed borrowers is categorized as higher risk compared to mortgages for regular hourly or salaried employees, therefore Lenders demand a higher minimum downpayment.

Thousands of self-employed borrowers have been successful in obtaining financing to purchase their dream home or to refinance their existing property.  If you know of a friend or family who may be too hesitant to purchase due to false information or simply fear of the unknown, please feel free to refer them to us and we will help them get financing.

¹ Genworth Financial Canada, The Homeownership Company, is the leading private sector supplier of mortgage default insurance in Canada. Genworth works with lenders, mortgage brokers, real estate agents and builders to make homeownership more accessible throughout Canada. The company combines global experience in mortgage insurance with technological and service leadership to deliver innovation to the mortgage marketplace.

Thanks for reading!

We welcome your questions and feedback.

Bernadette Laxamana’s Mortgage Blog

You can comment on this blog here.