It is harder for entrepreneurs to get a mortgage than a salaried individual. Anyone self-employed may find it challenging to get a mortgage than a person who works on a salary. It seems an entrepreneur needs a few more documents than a salaried person when booking a mortgage.
In the case of a salaried person getting a mortgage is easy. They only need to provide a letter of employment and the most recent paycheque. But for an entrepreneur, the case is different.
Any entrepreneur who wants to own a house needs to qualify for a mortgage. Lenders will look into four factors for entrepreneur mortgages, income, credit, down payment, and the property itself.
For income, lenders will want to look into your earnings, whether one has been in business for at least two years, and filed two years of tax returns. One must also provide personal T1 generals along with notices of assessment to the mortgage lender.
In case the business an entrepreneur is a corporation, then they also have to provide corporate financial statements as well. The main problem when it comes to getting a mortgage for an entrepreneur is the income and tax returns. Most of the entrepreneurs issue minimal income on tax returns.
This may cause trouble when one wants to buy a home. So, when you plan on getting a mortgage, talk to your accountant, you can plan the tax returns in a way that will favor you getting a mortgage.
Getting a home is a dream for every self-made man. So, if you are an entrepreneur and want to own a home, the process may be a little complicated, but it’s achievable.