If you own your own business—or if you’re buying a home with someone who does—you understand how difficult it can be to qualify for a mortgage in today’s environment. Fortunately, as many self-employed individuals across Canada are discovered, there are options at your disposal—although you may have to pay more for them.
According to this article on CTV News, more self-employed individuals are turning to private lenders for their mortgage needs. As a result, private lenders in areas like Greater Toronto have doubled their market share since 2015, according to the Bank of Canada.
While mortgage stress tests and poor credit scores negatively impact all types of buyers, self-employed buyers are unique in that—in addition to these challenges—many also struggle with reported income. Come tax time, many are trying to expense as much of their costs as they can—which dramatically brings down their income, and ultimately affects how much mortgage they can qualify for.
Unlike the big banks and other mainstream lenders, private lenders are more interested in property value than an applicant’s income. As a result, while you may end up paying a little more in mortgage interest, depending on your business and your financial circumstances, this additional cost may be worth it in the long run. Alternatively, it could be the short-term solution you need to get on the property ladder.
If you’re interested in obtaining a mortgage with a private lender, give me a call. I’d be happy to assess your needs and determine if this route is best for you.