Typical Lending Criteria For The Self-Employed
Two things to keep in mind.
Most self-employed persons have a more difficult time getting pre-approved for a mortgage. The ideal image of a borrower by most lenders is one who has a stable job and thus a consistent stream of income as part of a regular pay cheque. Self-employed individuals rarely have this luxury.
If you want to maximize your chances of being pre-approved for a low mortgage rate loan while self-employed, here are some of the criteria you need to look out for:
Good Credit Score
A respectable credit score will always provide a boost to your finances and enhance your chances of getting a good deal on your Canadian mortgage rate. However, self-employed individuals can benefit a great deal from a positive credit score – in some cases, a high score may even help them win the favour of some discriminating lenders. Therefore, keep close tabs on your credit. The better your score, the better your chances will be of getting the best mortgage rate, whether you’re self-employed or employed full-time.
You need to be self-employed for a considerable period of time. Lenders are more apt to trust you with a mortgage as a self-employed borrower if you are able to show them your stability as a self-employed income-earner. Most lenders will require you to have at least a two-year track record working for yourself.
Your ability to provide sufficient documentation is also an important factor in getting a low mortgage rate. As much as possible, you need to be able to back up your income records with income statements and tax returns so you can qualify for a better mortgage rate.