Well, you went for it! You decided to take a risk and become your own boss. This should be celebrated – and for the most part it is. You are contributing to the economy, creating jobs, and mastering your craft. So why can it be much harder for you to secure a mortgage?
Those of you who have gone through this process, know all about it. It can feel like quite an invasion of privacy – so many documents and information to provide just to prove that you can afford a property. There are a few key points Kendra (from Kendra does Mortgages) has taken the time to share with us on how to help you prepare for this great purchase.
Photography By: Nicole Constante
Qualifying Your Income
One thing I know is that we all love paying less tax, right? So what do we do? Deduct and show less income on our tax returns. Although this is every Accountant’s dream and helps us pay less in tax, it’s not favorable when applying for a mortgage. Many lenders and the mortgage insurers offer a stated income program where we can state the income required for the application and can help with your approval.
Documents that will need to be reviewed are: Articles and Registration of Incorporation as well as the past two years of your: T1 Generals (Accountant prepared, please), Business Financials and Notice of Assessments.
Choosing the Right Down Payment
To participate in this stated income program, you would need a minimum of 10% down to qualify (5% must come from your own sources and 5% can be gifted). With this size of down payment, your mortgage would need to be insured, therefore additional premiums must be paid. If you want to avoid all insurance premiums, a minimum of 35% down would be required – not the traditional 20%. Premiums and your best down payment strategy will be discussed during the application process as everyone is different!
Documents that will need to be reviewed are: 90-day bank statements from all accounts you will be using for your down payment.
Tips for Success
If home ownership is your goal, here are some tips that will help you get there!
Determine how much you want to put down (10%, 35%, more?) and keep it in a separate savings (TFSA, GIC, etc.) account. 90-day history is required and all large deposits must be sourced.
Allocate extra funds for closing costs: your lawyer, insurance, etc. (roughly 1-2% of purchase price) and costs to furnish or renovate your new home.
Keep your credit in check! A minimum of two years’ history is required with at least two active accounts (credit card, loan, phone bill, etc.). Make your payments on time and keep those balances low.
Have an Accountant prepare your taxes and financials. This will keep everything organized, precise and professional.
And of course, talk to a Mortgage Broker (me) ! I will help you strategize and come up with a plan that is tailored to you, plus ensure you are receiving the best advice.
Photography by: Nicole Constante
Do you feel ready to buy a home yet? Trust me, it is achievable!
With the right plan, we can get you there. If you have any questions, do not hesitate to reach out to Kendra at kendradoesmortgages.com. Kendra will be more than happy to walk you through this incredible purchase and provide you with the best options available.
Kendra not only specializes in assisting first time home buyers making that next step to owning a home, but she also has the ability to strategize with clients in growing their real estate portfolio.
#TipsyTuesday post submitted by Kendra Henderson | Kendra Does Mortgages
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