Sometimes it can take a while to get approved for a mortgage as a self-employed individual. In fact, you're going to have to fill out a lot more forms than if you were working a regular 9-to-5 job and collecting a salaried paycheck. Although it can be more challenging to get a mortgage when you're self-employed, and there's a lot more paperwork to it, it doesn't mean to say that you won't be approved when all is said and done.
Approximately 15% of Canadians are self-employed and every year it seems to get harder to get approved for a mortgage when you work for yourself. You'll need to prove your earnings and be able to show the lender why your approval should be granted.
There have been a lot of changes within the last year to mortgages in general in Canada, which makes for more reviewing for a mortgage for both salaried and self-employed people. On the whole, however, it does impact self-employed individuals more than others.
It's not a secret that a self-employed person will often use creative accounting methods to show less income when filing his income taxes. The idea is to reduce the taxes as much as he possibly can on paper, which can end up slowing down the mortgage approval process considerably. As well, if someone is taking cash jobs and not recording them as provable income, getting a mortgage becomes all the more difficult.
It all comes down to being able to prove to the lender that you are worthy of a mortgage and will be able to keep up with the payments on it. If you're having a hard time proving your income, there are stated income programs that may be an option, but not all financial institutions support them.Quite often it can be harder to get a mortgage from one of the big banks in Canada and you may be better off talking to a mortgage broker about your situation before trying to apply for one. The major banks in Canada take a rigid approach when looking through self-employed mortgage applications and once you have been turned down for a mortgage it doesn't look very good when you want to apply again with a different lender.