April 18, 2011

Low Doc Mortgages; a Tool for the Self Employed

Every year 1.5 per cent more of the Canadian working population will opt to become self employed. That means that right now roughly 20 per cent of the workforce, or about 3,000,000 people, are working for themselves. And why not? Being your own boss affords a host of bonuses. Make your own hours, work with clients you choose, and if you choose to work from a home office, you can write off a lot of your expenses including rent, utilities, water, heat, phone , equipment and Internet.

Attaining a mortgage while self employed, however, can pose a bit more of a challenge. The expenses which you’ve written off in lieu of income may have left your books, and tax assessments, looking less than desirable to major banks. There are, however, lenders that base your eligibility for home financing less on paperwork and more on your credit history.

The Low Doc Mortgage is a product specifically designed for the self employed home shopper. Lenders providing this financing don’t need to see proof of your income, but they do need to see a good credit score and proof that you have been employed for the last three years.

In addition, the property you are seeking to purchase will generally need be located within, or in close proximity to, a major centre. Depending on the mortgage lender, other restrictions may apply.

Once you are approved for financing and moved into your new home, rent can be replaced by mortgage interest as a viable home business expense.

Low doc refinancing is also available. Again, with proof of good credit and sustained employment, you may qualify to refinance up to 85 per cent of the current appraised value of your property. Contact an independent mortgage broker to find out more on using a low documentation mortgage, or refinance, to fund your next property purchase, or big investment venture.

Article provided by CanEquity.