How to Prepare Your Finances for a Self-Employed Mortgage Application

As a self-employed individual, obtaining a mortgage can be a more challenging process compared to traditional 9-to-5 employees. The good news is that with proper preparation, it is still possible to secure a mortgage that suits your needs. In this blog post, we will discuss how to prepare your finances for a self-employed mortgage application and what lenders look for when considering your application.

At MassMortageGroup.com, we understand the unique challenges faced by self-employed individuals when it comes to obtaining a mortgage. Our team of specialized mortgage brokers and mortgage agents has helped many self-employed individuals secure a mortgage that suits their needs.

Understand the Documentation Required

When applying for a mortgage, lenders will require you to provide documentation that proves your income and financial stability. As a self-employed individual, you will need to provide additional documentation compared to traditional employees. This includes:

1. Two years of personal tax returns, including all schedules.

2. Two years of business tax returns, including all schedules.

3. Financial statements for your business, including a profit and loss statement and a balance sheet.

4. Bank statements for both your personal and business accounts.

5. A notice of assessment from the Canada Revenue Agency (CRA).

6. Contracts and invoices from clients to prove that you have a stable income.

7. A letter from your accountant confirming that your business is in good standing.

It is important to gather all of the necessary documentation before applying for a mortgage. Missing or incomplete documentation can delay the application process and possibly even result in a denied application.

Maintain Good Credit

Maintaining good credit is important when applying for any type of loan, including a mortgage. Lenders look at your credit score to determine your creditworthiness and the risk of lending you money. As a self-employed individual, your credit score is even more important because you don't have a traditional employer to vouch for you.

To maintain good credit, make sure to pay all of your bills on time, keep your credit utilization low, and avoid applying for too much credit at once. It is also a good idea to check your credit report regularly to ensure that there are no errors or fraudulent activity.

Save for a Down Payment

Saving for a down payment is important when applying for a mortgage, especially as a self-employed individual. Lenders like to see that you have some skin in the game and are willing to invest in the property.

Aim to save at least 20% of the purchase price for a down payment. This will help you avoid paying for mortgage insurance and can also help you secure a lower interest rate.

Work with a Mortgage Broker

Working with a mortgage broker can be especially beneficial for self-employed individuals. A mortgage broker can help you navigate the application process, find lenders who are willing to work with self-employed individuals and negotiate the best mortgage terms on your behalf.

At MassMortageGroup.com, our team of specialized mortgage brokers and mortgage agents has years of experience helping self-employed individuals secure a mortgage that suits their needs. We understand the unique challenges faced by self-employed individuals and work hard to find solutions that work.

Obtaining a mortgage as a self-employed individual requires proper preparation. By understanding the documentation required, maintaining good credit, saving for a down payment, and working with a mortgage broker, you can increase your chances of securing a mortgage that suits your needs. 

Contact MassMortageGroup.com today to learn more about how we can help you with your self-employed mortgage application. To learn more about the services we offer, please click here. To contact us, please click here or call us at (905) 707-9595