Can you get a self-employed mortgage if you are in debt?

It is a well-known fact that it can be harder for entrepreneurs to get a mortgage. The same can be said of those with debt. So, if you are both self-employed and have debt, it can feel like you have two strikes against you. But we have good news! It is possible to get a self-employed mortgage even if you have debt.

The first step you should take if you are in this position is to contact your mortgage broker. Being self employed and having debt can make you a riskier investment in the eyes of traditional lenders, but your mortgage broker has access to a number of alternative and private lenders who may be more willing to give you the loan that you need to become a homeowner.

If you prefer to go with a more traditional lender such as a bank or credit union, this too may even be possible. A lot is going to depend on what your debt service ratio is or rather what percentage of your total income you are using to make your minimum debt repayments.

The higher that percentage is, the more difficult it will be to get a mortgage from a traditional lender. Fortunately, there are ways to lower this percentage. In addition to making as many extra payments as you can to lower the balance, you can also see about consolidating your debt in order to lower your interest rates. The lower you can get your interest rates, the faster you will be able to pay off the debt.

Regardless of whether you decide to apply for a mortgage with a traditional lender or an alternative one, you will want to gather as much financial information as you can including bank statements, notice of assessments, and any other additional proof of income that you may have.

And finally, one more piece of good news. While you may be considered a riskier investment to some lenders, the CMHC has recently made it easier for entrepreneurs with less than a 20% down payment to get a mortgage.

If you would like to learn more about these new guidelines or if you would like to speak with a professional mortgage broker to learn about your borrowing options, then contact Matrix Mortgage Global today.