Self-employed individuals face unique struggles when they choose to buy a home. This is largely because there are certain financial statements that lenders prefer to have as a reference – statements like paycheck stubs or W2 documents – that aren’t easily obtained by a person who works for themselves. Mortgage brokers are aware of these struggles in an increasingly digitally-centered world where more and more individuals are choosing online entrepreneurship.
In this article we will briefly explain why self-employed individuals struggle so much to obtain a mortgage. We’ll also discuss the industry’s response, particularly in regard to mortgage brokers.
What is Guideline B-20?
In 2012, the Canadian government enacted Guideline B-20. This guideline forces lending institutions to more closely examine an individual’s financial situation before they can be approved for a mortgage loan. Essentially, it made the biweekly paycheck the golden standard for approval. This has left self-employed Canadians scrambling, even downright discouraged, as they realized how much harder it will be to achieve their dream of owning a home.
Fortunately, mortgage brokers have responded to this worry by facilitating services to these exact individuals (more details: https://askross.ca/second-mortgages-toronto-and-gta/ ).
How Can a Mortgage Broker Help?
While you, as a self-employed Canadian, might not have the greatest luck with traditional lenders, a mortgage broker shows you just how many bank and non-bank resources are available to you. They have great insight into the real estate industry and can connect the self-employed with lenders who will be happy to work with them.
One method that’s becoming increasingly utilized is the private loan. Private lenders are not bound by the same regulations of the banks and other lending institutions that you are likely used to. Flexibility is the highlight of private lending, so it’s something that your mortgage broker may prompt you to seriously consider.
The housing market in Canada is facing a number of hardships right now, including tighter restrictions on lending that has already led to fewer Canadians buying homes. Mortgage brokers are filling the needs of individuals, and not just the self-employed, who are being limited by the actions of the government in buying a home.
Everyone Should Work with a Mortgage Broker:
A mortgage broker is a great asset to have working on your side, regardless of where and how you work. Even if you do collect that coveted biweekly paycheck, the services of a mortgage broker are invaluable. They not only connect individuals to a number of lenders with competitive rates, but they also provide grounded, unbiased advice that their clients can put to use at every step of the way.