Overcoming The Challenges Of Getting A Mortgage When You Are Self-Employed

There will always come a time in your life when you may need to acquire a mortgage for the property of your dreams. Applying for one has some qualification procedures that you must follow. It will be easy to secure documents that you need in order to qualify for that much-needed mortgage if you are employed by a company who can help certify your capacity to pay the mortgage amount. The question is what will happen if you are self-employed?

Self-employed Canadians and the mortgage scenario

mortgage refinance

It has to be noted that almost 23% of income earners in Canada are self-employed or have at least made a living from part-time jobs. These statistics is an indication that more and more Canadians are attracted to being hired on a contractual basis or becoming self-employed to survive everyday living. The sad thing about this is it will be not as easy as it is for them to get approved for a mortgage loan from private lenders as it will be if they are employed by private companies or other companies for that matter.

The benefits and drawbacks of being self-employed

Being self-employed allows you to say you can work and survive on your own. Add to that, you can also pay slightly lower taxes because you can include your personal expenses among your deductibles before arriving at your taxable income figures. Take note though that there is a drawback that comes with the choice of being self-employed, one of which is it will not be easy for you to prove your income. Since you have a smaller income reflected on your tax return, it follows that you will have a hard time qualifying for mortgage and even if you do, you will only be granted a minimum mortgage amount.

Overcoming these challenges

It is good to note that mortgages are now available for you even when you are self-employed and just like you, there are other self-employed individuals who want to avail of such a privilege. Mortgage agents and brokers have made it possible for you to enjoy your hard-earned money and own the property you have dreamed of.

These agents work with you and give you access to lenders to get the amount of mortgage you need. They negotiate on your behalf in order to make the terms more flexible and agreeable for you. You can use these mortgages to buy a new home or other properties that you have in mind. All you have to do is basically show proof of income using documents such as income tax returns or a six-month bank statement. Business licenses, contracts, invoices, and articles of incorporation may also be required if you own a business.

New mortgage rules

One of the things you should bear in mind when looking for mortgage lenders in Montreal is to make sure that you are updated with the existing mortgage rules especially that new rules have been made effective on January 2018. You have to take note of what is in store for you with these new rules. Never hesitate to ask questions or make a research before signing the mortgage contract.

Are You Unsuccessful In Your Mortgage Renewal?

When your mortgage hits its maturity date, you will have to renew the outstanding balance for yet another term. You can do this repeatedly before fully paying off the mortgage. Before your term expires, your lender sends you a renewal offer via email. The new offer contains information on the new term and mortgage rates, with a slip on which you can sign and send back. However, as convenient as it may seem, your approval odds are never 100%. A great way to evade the inconveniences is switching best mortgage companies in Montreal. But, if your slip is denied, there is no need to worry. Let’s explore the possible options you may have if your slip is denied.

Reasons For Denial

While switching lenders is convenient, why not exhaust all available options before leaping out? A good reason to move on with your lender is that you won’t have to re-qualify. If you pay off all your mortgage payments during your term, your lender will not deny you the mortgage renewal application. They will still review your current financial situation to figure out whether you are creditworthy. They may even evaluate your current employment and income rates to weigh the scales. If your finances are questionable, the lender may choose to deny your renewal. It is good to negotiate to see if you can increase your chances of fast approval.

Contacting A New Lender

If your lender denies you the mortgage renewal, or you are in search for better terms out there, you may consider going to another lender. To find a new lender, contact a mortgage broker or agent. However, the downside is that you have to submit a new mortgage application for renewal.

Since the new lender does not know anything about your financial status apart from your outstanding mortgage balance, they will have to verify your income to ensure you meet the standard credit requirements for approval. This makes it even more difficult. Therefore, do not cut links with your current lender just yet.

Possible Solutions After Being Denied

Both your current and new lender may deny you renewals. If so, do not give up. You can try convincing them into accepting your terms. If you fail, just consider other options. For instance, if your “A” lender is a bank or credit union, branch out to “B” lenders. Typically, they may be bad institutional lenders and trust companies for cash-strapped individuals. However, lenders go with logic. Therefore, if your credit score is way below the reasonable standard, you will still miss out. But, don’t bow out. Private lenders can suit you best at this level so you don’t sell out your home. You will have to convince that private lender because they need an assurance too before approving your request.

Getting to the point where you will be forced to sell your home is never your only last option. It can only happen when your finances dwindle below the required standards. To evade this tragic situation, make sure you timely pay all your monthly payments and you will maintain your good credit score. If you religiously follow the rules, it will not be difficult to have your mortgage renewed for another term.

Essential Information To Know About Private Mortgages

Does everyone want to secure a favorable mortgage deal? But still, many people cannot just land a good deal. The stringent Government regulations on down payments, high-ratio buyers and investments make many Canadians miss out on mortgage rewards these days. To, land a favorable deal, you have to do your homework beforehand.

While it is often said that housing is the bedrock of Canadian economy, in all reality, it is fast-dwindling as things currently stand. As a result, things have got harder for the self-employed individuals residing in far-flung areas. To evade this backdrop, more Canadians have resolved to shift to private mortgage lenders for their home financing needs. They save a lot and avoid the time-consuming guidelines and procedures set out by the traditional systems. Indeed, they are the go-to option.

Private Lenders Operate Differently

To start off, a private mortgage is simply a home loan offered by a company or individuals, and not a bank or any other banks. Among the greatest upsides of working with private lenders is, since they are financed by investors or a group of investors, they do not bow to the stringent guidelines set forth by the major institutions. Private mortgages are therefore more friendly and faster, particularly when it comes to the application process. This means if your situation falls squarely out of the conventional lending guidelines, it is the best catch.

You Will Qualify For Private Mortgages, If You:

  • Are self-employed
  • Intend to purchase raw land or private property
  • Desire to make a real-estate investment
  • Have less credit
  • Are suffering hefty penalties and need to access equity but don’t want to refinance your bank mortgages.
  • Are looking to renovate already existing property
  • Seek a short-time loan.
  • Need to consolidate the high-interest rate debt.

How Private Mortgages Operate

If you are thinking private mortgages are daunting, fear not. The secret lies in understanding the easy-to-follow process to secure a subsidized loan. First, you need to reach out to your broker who after assessing the situation, will determine whether you are eligible for the loan or not. Then he or she will search for best mortgages solutions that fit your needs. The experts who offer debt consolidation mortgages in Montreal will then structure the deal, with an exit strategy so you know how long it will take.

It is important also to keep in mind that private lenders mostly consider applications from borrowers at convenient locations. It is because private mortgages are uninsured to allow the lender to easily regain the property in case of a default. It is therefore that before branching out to any broker around, be mindful of the distance involved and most importantly, the charges you will incur as the deal is saving you money. Before approaching a broker also, take some time to evaluate their reputation and reviews to avoid schemers.

Currently, the private mortgage industry is steadily growing in popularity. Since many borrowers fall afoul of the traditional guidelines, they leverage the private mortgages opportunity to upscale their business. Do not be too fast, so you avoid a bad deal. There are countless options available, thus you must remember to scour the alternatives and settle for what is favorable on your part.

What Are Assumable Mortgages?

Interest rates in Canada are predicted to rise over the next few years. With this prediction, many people are thinking about mortgage assumption, also known as assumable mortgages. This type of mortgage, basically, allows the buyer to assume or take over the seller’s existing mortgage. This is only possible, however, upon the approval of the lender. Learn more about the ins and outs of assumable mortgages through the following facts.

The assumable mortgage process

This mortgage is actually a financing agreement where a seller is allowed to transfer his mortgage to the buyer. The transfer includes everything related to the seller’s existing mortgage including interest rates, mortgage terms, and of course the remaining balance. This gives the buyer a chance to get rid of the rudiments of negotiating a new mortgage, which in these times can have a higher interest rate.

The process is not commonly utilised simply because lenders do not recommend them as it will place them into a losing situation. Years ago, there was no formal approval needed for assumable mortgages. The seller back then, agrees that he will be responsible in case the buyer fails to make payments. Some were not at all interested with this type of mortgage.

The pros of assumable mortgages

mortgage refinance

It is clear that in assumable mortgages, interest rates are lower. This will give potential buyers a list of benefits as they can save much on closing costs as well as appraisal fees. Brokers and lenders can likewise help when it comes to reviewing the mortgage thus giving the buyer a detailed calculation. This will allow the buyer to get a better deal after all costs and considerations have been factored in. On the part of the seller, an assumable mortgage can be his best way to sell his property in the fastest possible time. Eligible buyers become enticed with the purchase basically because of the lower interest rate.

The cons of assumable mortgages

Assumable mortgages are not all benefits. There are drawbacks when availing one. The buyer, for example, has to assume higher monthly payments since the amortisation period becomes shorter. Mortgage insurance premiums may also be added to the cost of the mortgage thus increasing the monthly payments even more.

Sellers, on the other hand, may have to face risks since they are passing on the mortgage to someone who has not gone through the entire process of applying for a mortgage. When buyers default on payment, sellers have to take charge. Even when there is mortgage insurance already in place, the seller will still be obliged to pay any remaining balance.

An assumable mortgage is not your only way out of an increasing interest rate in the market. There is not even a guarantee that the lenders will approve your request for this type of mortgage plus it is still possible you have to undergo the necessary parts of the application process before getting approved. If you are looking forward to purchase a home and want to make sure you are getting the best deal, you have to check mortgage rates in Montreal first. You should also get advice from experts.

How Is A Mortgage Interest Rate Different From Its Annual Percentage Rate (APR)?

If you want the best out of a mortgage, there are several things you will need to get right including picking the right mortgage lenders and making sure that your credit score is good before starting the application process. It’s also critical to understand some of the technical features of mortgages. Knowing how mortgages work puts you in a better position to negotiate for better terms, higher limits and more. It’s also an important tool for people who have current mortgages. By understanding the intricacies of a mortgage, it will be easier to monitor your mortgage and make beneficial changes such as refinancing the mortgage.

An important technical piece of knowledge is understanding the difference between a mortgage interest rate and its annual percentage rate. Interest rates are usually the starting point for negotiation or examination of mortgage terms, so it’s important to understand it thoroughly.

The interest rate


This is the percentage of the mortgage amount that you will be charged for borrowing. There could be other fees associated with a mortgage, but the mortgage interest rate can be thought of as the base fee. When comparing mortgage services from different lenders, it is common to compare the mortgage interest rate to find out which is the best for you. This is important, but should not be the only variable you use to figure out what would be best for you.

The annual percentage rate 

On the other hand, the annual percentage rate is a mortgage fee which takes into account the mortgage interest rate and other fees that may be levied by the lender. For instance, a particular lender may provide a mortgage product that has a comparably low interest rate, but which has many other additional fees. These could be percentages or set amounts of money, and could be paid once or repeatedly. Many people consider the Annual Percentage Rate as the true amount of money that the mortgage will cost you.

Calculation of the APR

The mortgage interest rate is easy to calculate, since you simply get the interest rate and find out how much this translates to when you consider the amount you are going to apply for. The APR, on the other hand, is a little more complex to calculate. To do so, the lender’s fees are included in the interest rate, usually by amortizing these fees over the mortgage’s life. In essence, it assumes that they are additional payments. After all the additional fees are added this way, the new interest rate is then calculated.

This gives a true picture of how much you will spend on the mortgage, rather than focusing on the interest rate alone. It can be used in many other decisions besides choosing which mortgage to take, including getting a second mortgage in Montreal or choosing between static and variable interest rates.

When making the decision to get a mortgage, always ensure that you understand the true amount you will pay for it using the APR. High quality lenders will always be upfront and give you information regarding the extra fees you will be charged including the interest, so that you can get a true picture of the mortgage cost

How Social Media Can Help You Get The Best Mortgage Broker

The first thing that comes to mind when you think about mortgage brokers using social media is personal space. To that extent, most people rarely picture themselves following mortgage brokers on Twitter or even liking their Facebook pages.

The idea of self-promotional spams deters most people from using social media for purposes such as finding mortgage brokers. However, if you think about it carefully, you are not truly considering the right angle that a mortgage expert would take to make social media effective for their business. Here is more on how things really work with mortgage experts on social media.

Personal profile

A good mortgage broker with several social media accounts will definitely have several profiles. On the profile, you will be able to find key information that may help you make the right choice. For instance, LinkedIn allows you to see the qualifications of a mortgage broker, number of years he has been in the mortgage industry and his circle.

Typically, a good mortgage broker will be in a circle of professionals as it is good for referrals and recommendations. You can also compare information from different profiles to see if there is any inconsistency.

List of achievements

Most notably, you will be able to see a list of achievements that a mortgage expert has made over the lifetime of his career. You can check out reviews to see what clients are saying about them. Dissatisfied clients will openly express their opinions regarding the services they received from a particular mortgage broker. This is because they would not want anyone to have a bad experience when working with a certain mortgage broker. The list of achievements alongside client reviews helps you to gauge the suitability of a mortgage broker.

Narrowing down choices

You are likely to get multiple mortgage brokers with social media accounts. While most of them may be good, you can actually end up with the best one by narrowing down your choices. The good thing is that you do not have to spend more time making physical visits to mortgage professionals. If anything, you can compare their achievements, client reviews, business image, reliability and so forth. All these factors help you to narrow down your choices and find the best mortgage lenders in Montreal.

Direct interaction

If there is something that makes social media great, it is definitely the interaction platform that it offers to numerous users. You can directly interact with a mortgage broker on social media by chats, live videos or even direct messages. If you have any questions, you can get answers right away. Social media such as Facebook has a call button feature for its pages. That means you can make a direct call and speak to a mortgage professional by simply clicking on the button.

As you can see, social media has a lot to offer when it comes to interaction and connecting people. You do not always have to use social accounts for personal stuff. You can also try out official things such as getting the best mortgage broker.

How Does Bad Credit Mortgage Work?

For many borrowers, they have a history of bad credit and this has made many lenders and banks reluctant in facilitating their mortgage easily. People have fallen into this situation as a result of prolonged illness, redundancy, divorce, car accident or perhaps a combination of all these situations mentioned earlier. With all these, is it possible to acquire a mortgage loan? According to today’s trends, the answer to this question is an emphatic yes!

A few years back, the application of a loan would involve a checkup on your income background and credit history. But this is different today. With fast pace of technology, any defaults is impossible to hide. Your application is rejected instantly if there is an imperfection in your income or credit history. This has limited the number of individuals applying for loan. There are different lenders who render bad credit mortgage in Montreal with various options available for their clients. While choosing one over another, make sure you know everything that has to do with bad credit mortgages. Most of the times, these types of mortgages are sugarcoated. You should keep your eyes on the following.

Higher interest rates


One of the characteristics of a bad credit mortgage is high interest rate. Borrowers are charged a higher interest rate as a form of compensation in the risk they are taking. The truth is that, there is a loan risk for borrowers with a bad credit record and many lending companies put this into consideration. A higher interest rate is imposed on the borrowers for them to take this loan. One of the reasons behind this is to protect the lender in event of a mishap and a foreclosure on a bad credit mortgaged property.

Discount points 

Bad credit mortgages come with discount points, which is common. The discount point is composed of a percent of the overall purchase price. Borrowers of bad credit mortgage are billed higher discounts points. This is usually between four to five points. Point may go higher for bad credit mortgages as far as ten. This rise isn’t against federal law and unpopular practice. In this case, it is determined by the lending company.

Larger down payments 

There is a larger down payment for a bad credit mortgage when compared with other types of loan. Borrowers are charged a large down payment in exchange to ignore their previous credit history. Normally it is 70 to 75 percent of the value of the loan. In this case, the lenders are protected as a result of equity in the property. Upfront price of this type of loan may not be affordable for borrowers. But if you feel that the down payment required is affordable, this might be beneficial for you. The down payment taken by you will cover a considerable part of the entire purchase price and this signifies that a lower monthly rate will be paid on the bad credit mortgage. Whatever the case may be, you should seek the help of an expert.

Is It Possible For Someone Else To Pay For My Mortgage?

Most lenders don’t really care how you repay your mortgage as long as you make your monthly payments on time. The law understands that sometimes due to unforeseen circumstances, a homeowner may not be able to complete his payments on a home loan. To answer the above question, yes it is possible for someone else to pay for your mortgage.

 Be clear on repayment terms

You need to alert the mortgage lenders in Montreal on the changes and make it clear as to whether you will retain the title of the house or you wish to transfer it to the person making payments. If you wish to transfer ownership then that means that the person paying the mortgage will need to start a new process to get a deed of trust. Usually, the lender will need to check his financial history to make sure they are able to take over the new responsibility. The lender will have to approve first before the third party can start making payments.

If the person is offering to pay without requiring anything in return, then that is treated as a gift. The law requires the person to pay gift tax on his monthly payments. Some lenders don’t accept payments directly from the third’s party bank account and so that means they need to transfer the cash to your account first. You need to have clear records so that it can be clear to the IRS on how much gift tax is deductible. There are some common circumstances that allow other people to pay for someone’s mortgage. Some of the common circumstances include:

Payments from a spouse after divorce


Usually, a couple has to agree who will reside in the house after the divorce is complete. Just because a couple is separated it does not negate them from repaying the mortgage. A spouse can agree to pay the mortgage even after moving out. If the couple has a joint claim on the title of the house and they agree that the one residing in it has to take over mortgage repayments then he or she has to apply for a quitclaim deed. The lending company sometimes has to check financial statements to ensure that the new sole owner is able to repay the home loan.

Children paying for their parents’ mortgage

It is normal for a child to want to pay for his parents’ mortgage as one way of showing appreciation. If the child does not require the ownership of the title or he does not expect a repayment from his parents later on, then this is considered to be a gift. He will still be legible for a gift tax. If by any chance the child wants to assume the ownership title, then he has to undergo a process that takes 60 to 90 days. Lenders use this time to scrutinize his financial records before changing ownership. The parents have to confirm that they are willing to turn over the house title to their son or daughter.

It’s Time To Figure Out Which Kind Of Mortgage Is Right For You!

Mortgages are a good option for those who desire to acquire property or equipment fast. Unfortunately, you cannot compare a mortgage to a one-size-fits-all garment. There are different types of mortgages one can choose from to fit different situations. What does this mean? For example, when you go shopping for a vehicle, a salesman can give you all the advantages that come from owning a pickup truck and when you look at it there is actually some sense in owning one. However, what he did not consider was that you could be a salesman working in the city or a soccer mom who needs to drive her kids to and fro school every day.

Yes, the truck sounds like a good idea but will not fit these two scenarios. This is the same with mortgages. The following are mortgages type that you can choose from depending on what suits your situation best.

15 year FRM

A 15-year fixed rate mortgage means that you have to pay off your mortgage in fifteen years. This mortgage type allows you to pay off your mortgage within a short period of time and that come with several benefits. It means that you will not have to put up with payments in your golden years when you are on a fixed income.

The other benefit is that you save a lot of interest to be paid compared to a 30-year plan. The shorter the loan term the less the interest rate! One downside to this mortgage type is that you have to make higher monthly payments than when you have to pay for a longer period of time. This mortgage plan is best suited for someone who is able to make huge monthly payments without too much financial strain.


5/1 ARM

This is a mortgage type fully known as the 5-year adjustable rate mortgage. There are myths about this mortgage type which can easily scare one away. The 5-year adjustable rate mortgage usually means that you agree on a low interest rate let’s say about 2.75 percent for the first five years. After the first five years are over, the rate changes every year depending on a defined index. This means that your monthly payments will also change depending on how rates change. You save a lot of interest the first five years. This plan suits best someone who is planning to sell off their house after the 5 years are over therefore saving on interest paid.

30 year FRM

The 30-year fixed rate mortgage is popular to many mortgage applicants the reason being the security if offers to borrowers. The mortgage payments are spread out in 30 years on a fixed interest rate meaning that payments stay constant for 30 years. The monthly payments are usually low compared to the 15-year FRM and the first five years of 5/1 ARM. You can use the amount saved on monthly payments to invest in other things therefore, giving you more chances of growing. This plan is best suited for someone who loves security and is looking for low mortgage rates.

3 Important Things You Need To Lock Down Before Applying Your First Home Loan

Setting off on a journey to get your own home is such an exciting thing. This is because the last thing you will worry about at the end of every month is paying rent. While there is some excitement in buying a new home, there are also a number of challenges that you may face. As you read on, you will learn about three basic things that you need to know to get it right when looking for the most effective finance solution so you can acquire your dream home.

Present your credit report

credit report

This should not worry you at all because you are entitled to at least three credit reports from various credit bureaus operating in your locale. It is important to ensure that you have taken a keen look at the credit reports before you start picking houses. If you are intending to acquire a home with a spouse, they should also bring out their credit reports.

Look for anything that may lead to illegibility when applying for a home loan. Try to see if you can settle any outstanding debts or possibly fix certain errors that may exist in the credit report. If there is any serious issue, you can always liaise with the bureau and you will be assisted.

Boost your savings

If you are planning to get a new home, you should consider boosting your savings. You can simply do that by increasing the amount of money you set aside monthly or periodically by a certain percentage. You should increase your savings because when you apply for a loan, the lender will require copies of your bank statements.

Generally, they are interested in knowing the amount of money that you have in your bank account currently. Note that it applies to all the bank accounts under your name. You will have to be transparent and genuine regarding this matter. This is because you may be required to explain any unusual large amount in any of your bank accounts. If you have less savings, that could still be a problem. Just ensure you have the right amount of savings in your bank, which is achievable by saving a little more.

Look for a good mortgage lender

When looking for a mortgage lender, you should not close a deal with the first lender who offers you a loan. Instead, try to approach several other lenders by either telephone calls or email. Finding several lenders will put you in a position to make the right choice. You will be able to determine if you will do well with a particular lender. Different lenders offer varying mortgage rates, varying fees and terms. Shopping around allows you to get the best deal.

Before applying for a home loan, you need to ensure that everything is perfectly in place. If there is anything that seems unclear, you may consult brokers for further explanation. Real estate agents are also in a better position to help you get a better view of things. Essentially, good credit report, adequate savings and a good lender are the crucial factors that will help you get a good mortgage deal.