Obtaining a mortgage as a self-employed individual can be a daunting task. Lenders often have stricter requirements and may view self-employment as a riskier form of income. However, with the right preparation and knowledge, securing a self-employed mortgage Toronto can be achievable.
In this article, we will delve deep into some helpful tricks that can increase your chances of getting approved for a mortgage while being self-employed.
- Work with a Mortgage Specialist or Broker
Navigating the world of mortgages can be overwhelming, especially for self-employed individuals. Working with a mortgage specialist or broker who has experience in dealing with self-employed clients can be incredibly beneficial. They understand the challenges and complexities of securing a mortgage while being self-employed and can guide you through the process. They also have access to a wide range of lenders, increasing your chances of finding one that is willing to work with self-employed individuals.
- Improve Your Credit Score
Having a good credit score is crucial when applying for any loan, including a mortgage. As we mentioned before, maintaining good credit is one of the essential tips for securing a self-employed mortgage. However, if your credit score is not where it needs to be, there are steps you can take to improve it. Some actions that can positively impact your credit score include paying off debt, making payments on time, and not opening too many new credit accounts.
- Show Consistent Income
Lenders want to see a stable and consistent income when considering a self-employed individual for a mortgage. It is essential to show consistency in your income over the past two years by providing tax returns and financial statements. If your income has increased over the years, this can also work in your favor as it shows growth and potential for future earnings.
- Be Prepared for a Larger Down Payment
Due to the increased risk involved in lending to self-employed individuals, lenders may require a larger down payment than what is typically required for a traditional mortgage. This can range from 10% to 20% or more depending on your unique situation and the lender’s policies. It is essential to plan accordingly and have enough savings set aside for a larger down payment.
