Joleen C,. Darien C. • August 30 2018
Securing a mortgage as self-employed will get easier
Being self-employed comes with a lot of benefits. Creating your own schedule, no boss ordering you around, autonomy etc.
However, a big downside to this control is the propensity to have unpredictable income. Unpredictable income can make it especially hard for self-employed individuals to secure mortgages, as lenders do not like instability.
Luckily for these entrepreneurial types, as of October 1st, 2018 the criteria for self-employed borrowers is becoming more lenient. On July 19th the Canada Mortgage and Housing Corporation(CMHC) will officially be providing lenders guidance and flexibility, in regards to the requirements placed on self-employed borrowers. This mandate is aligned with the NHS(National Housing Strategies) mission to address Canadians housing needs proactively.
Circumstances will be provided to lenders from the CMHC, in order to accommodate the unique set of conditions many self-employed borrowers face. These circumstances are particularly targeted to borrowers who have been operating their business for less than two years, or have operated in similar lines of work for less than 24 months. The CMHC will also be providing a list of documentation alternatives that self-employed borrowers may provide to lenders. This will create a new level of flexibility for satisfying income and employment requirements. Included are, transactional, portfolio insurance and mortgage insurance for buyers who have put a down payment of 20% or less.
“These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates” - Romy Bowers, Chief Commercial Officer, Canada Mortgage and Housing Corporation.
This new mandate by the CMHC is a significant first step in ensuring Canada’s self-employed workforce has an opportunity to secure mortgages. In the second quarter of 2018 the self-employed sector increased +4500(0.4% increase) according to the Ontario Employment Report, illustrating their growing significance to the Canadian economy. We hope Gerowrth and Canada Guarantee follow the CMHC and make modifications to their conditions as 2019 approaches.