Blog Archives - Page 19 of 35

Mortgages for the Self-Employed

November 5, 2022 By Stan Savov

Did you know? Approximately 15%+ of Canadians are self-employed, making this an important segment in the mortgage and financing space. When it comes to self-employed individuals seeking a mortgage, there are some key things to note as this process can differ from the standard mortgage.

For self-employed individuals with an established business seeking best rate financing, the business must have a minimum of two years of history. This includes self-employed applicants who own a full or part-time business and covers sole proprietorships, incorporations, and partnerships.

In order to obtain a mortgage when self-employed, most lenders require Revenue Canada personal tax Notices of Assessment and respective T1 Generals be included with the mortgage application for the previous two years. For individuals in Quebec, you will be required to provide NOAs (Notice of Assessments) from Revenue Canada, Relevé 1 from Revenue Quebec and T1 Generals. Typically, individuals who can provide these documents – with acceptable income levels – should have little issue obtaining a mortgage product and rates available to the traditional borrower.

One primary benefit of being self-employed is the privilege of writing your income down. You enjoy less tax because you get to write-off expenses, but you lose borrowing power. It is important to be aware of this because you can either pay less tax or have more borrowing power.

Three categories self-employed people fall into

As a self-employed individual, you will fall into one of the following three categories:

You can provide the tax documents and you have a high enough income, so there aren’t any initial impediments to your application.
You can provide Canada Revenue Agenc documents, but don’t have enough stated income due to write-offs. In this case, you need a minimum of 10% down with standard interest rates.
If you put down less than 20% down payment when relying on stated income, the default insurance premiums are higher.
You cannot provide the Canada Revenue Agency/ Revenue Quebec documents, which means you will be required to put down 20% and may have higher interest rates.

For a typical borrower, lenders often require a letter of employment and recent pay stubs to confirm and calculate income. When it comes to calculating income for a self-employed application, lenders will either take an average of two years’ income or your most recent annual income if it’s lower.

When it comes to submitting your mortgage application, you will need to provide the standard documentation in addition to the following:

For incorporated businesses – two years of accountant prepared financial statements (Income Statement and Balance Sheet)
Two most recent years of Personal NOAs (Notice of Assessments) and tax returns
Potentially 6-12 months of business bank statements
Confirmation that HST/Source Deductions are current

If you’re self-employed and looking to qualify for a mortgage, or simply have some questions for when you are ready in the future, please don’t hesitate to reach out today! I would be happy to work with you to ensure you have the necessary documentation, understand your options and can obtain a pre-approval to help you understand how much you qualify for!

More related readings you might like:

Selling Your Home in Winter

November 5, 2022 By Stan Savov

Tips on How to Sell Your Home in the Winter

While you might think selling your home in winter is harder, with the right considerations it doesn’t have to be! When selling your home during warmer months, the focus is typically on curb appeal and gardening, as well as having bright colors and patterns to draw out different rooms.

While curb appeal should not be forgotten in winter months, the focus should be centered on creating a warm, comfortable and welcoming space. You can do this through the following:

Curb Appeal

If you live in an area that receives high amounts of snow, be diligent about keeping your sidewalk and driveways clear for visitors, and to keep your home looking clean for viewing. Always make sure to sweep any fallen leaves or debris.

Keep it Cozy

Ensuring your home is sufficiently heated during showings will also go a long way to making it feel more comfortable; a steady 68 to 70 degrees Fahrenheit during showings is ideal.

Light and Inviting

With days being shorter and darker during winter, ensuring your home is light and inviting can make a big difference. In some cases, you may consider repainting the walls before listing your property.

Declutter

When selling, it is important to declutter your home so that it looks its best and gives room for people to imagine their own belongings in your space.

Define Property Boundaries

If you are showing your home in the middle of snow season, be sure to mark the four corners of your property so that potential buyers can see exactly what they are getting.

While there is some extra work with selling your home in the winter due to the weather conditions, it can pay off! Buyers tend to be highly motivated and often there is less competition for sales during this time giving more focus to your home.

More related readings you might like:

Improving Your Financial Direction

November 5, 2022 By Stan Savov

Make 2022 the year of finance by improving your financial direction from the start! Even if you are living paycheck-to-paycheck, a few changes to the way you spend and look at money can make all the difference. It’s never too late to start again and reverse course! Here are a few simple ideas to get you started:

Create a Budget

In order to stop living paycheck-to-paycheck , you need to know where that paycheck is going. Creating a budget is simple with Google docs, or look into other online tools and sites to get started.

Pretend You Earn Less Than You Do

Give yourself a cut in pay. The goal is to put 10% in savings from each paycheck into your savings account. The easiest way is to do an automatic direct transfer from your chequing account to your savings every pay period.

Pay Down Debt

If you have a lot of credit card or unsecured debt, try paying the minimum on all but one of them and aggressively pay down that one card. Once it’s paid off, attack the next one. If you’re so deep in debt that you can’t fight your way out, consider consulting with myself or your local mortgage broker about your debt consolidation options and if your mortgage can be used to help you clean the state. They will be able to review your debt and possibly recommend a way to consolidate it into one simple payment with a single point of interest charges.

Build an Emergency Fund

Once you have your budget in place, review it and break it down into non-discretionary expenses (rent, groceries, utilities, etc.) and discretionary expenses (eating out, entertainment, clothes, etc.). See where you could cut down on discretionary spending and put that money towards your emergency fund. Even starting with just a little amount is great and helps you build the habit of saving.

Don’t Forget Your Future

Putting at least 3% of your paycheck into a retirement fund is a great idea, or maybe when you get your first raise instead of thinking of it as free money, simply put it into a fund and forget about it. You’ll be glad it’s there when you need it in the future.

Consider Downsizing

It may be time to consider a lifestyle change. Consider moving to a smaller place. Get rid of that cost of going to that expensive gym with a trip to the local park. Think about if you really need that brand new car or if a used one would work just as well.

More related readings you might like:

Make sure your holidays are stress and credit-free

October 31, 2022 By Stan Savov

The holidays are coming up! As much as these celebrations bring us joy and harmony, they can also bring us stress. This is particularly true when it comes to your finances!

However, don’t lose hope that this will be another draining year on your pocketbook. In fact, with a little planning, there are a few ways you can make sure your holidays are stress and credit-free.

• Determine Your Holiday Goals: Are you looking to plan an extravagant black-tie party or have a more low-key celebration? Maybe you just want to hang out with lots of family and friends and enjoy some good food? Or maybe you usually get away and are finding yourself homebound this year. No matter how you normally spend your holidays, sharing your thoughts with family will help determine your goals and come to a decision that works for everyone!

• Create a Budget: Once you have decided your expectations and goals for the holiday, it is time to create your budget. A little planning can go a long way to creating a credit-free holiday, and will help you spread out the costs. The first step is to create a list of everything you need, from individual gifts to decorations to baking ingredients and meal items to clothing!

• Start Now: Early planning can make all the difference when it comes to the holidays. Instead of lumping your entire budget into a couple paychecks, try keeping an eye out for gift ideas and cute decor all year long. While it may be too late this year, it could be a good strategy to try for 2023! Starting early will help reduce stress and give you more opportunities to scoop up incredible deals throughout the year, which means you can spread your budget even farther!

• Manage Your Expectations: Did you find the holidays refreshing last year, or were they somewhat draining and you’re still trying to figure out how to pay off your credit card bills? If you are someone that wants your holidays to be energizing and provide that feeling of togetherness, there is more to it than just spending money. Once you decide your expectations, it becomes easier to work towards things that create that result.

• Accept Help: While I know many of us try to do everything during the holidays so our families can just enjoy themselves, it is important to remember that the holidays are a time when we are supposed to support each other, and celebrate together! If you are hosting a dinner this year, don’t be afraid to ask your family to bring appetizers or drinks. If you are buying gifts for friends, set a limit or challenge everyone to make something by hand! Homemade gifts can often feel more special and it creates a fun exchange for you and your friends. There are many incredible ways to reduce stress and help get others involved so that the holiday is perfect for everyone.

The holiday is YOURS, so make sure you spend it whichever way brings you the most joy – and the least amount of stress on your pocketbook.

More related readings you might like:

« Previous Page