This is the first of a series of articles to educate self employed people about their mortgage options and to show them how we at Mississauga-mortgage.com can help them.

Some general comments:

Most self employed people do not know what their mortgage options are and what they need to do to prepare themselves for a mortgage.  As a result they leave themselves vulnerable to less than best products from their bank or mortgage broker.  Thus, it is vitally important that self employed applicants are empowered in the mortgage process.

It might sound unbelievable, but in some cases it is actually easier to get a mortgage for a self employed applicant than it is for an employed person.  This is because salaried or hourly paid applicants are restricted to the exact income that they earn.  Self employed applicants have more options, because of the nature of self employment.

Preparing yourself for a mortgage:
Here are a few things that you need to do

1. Contact Jacques du Preez at mississauga-mortgage so that we can do a full mortgage analysis for you.  This includes a mortgage pre-qualification.
2. Register your business.  Don’t just operate on a HST number.
3. Make sure that your business is more than two years old.
4. Make sure that your credit is good.  Good credit is more important than income for mortgage qualification.
5. Make sure your business is visible.  Here are a few ways that you can do this:
   a) Website
   b) LinkedIn
   c) Online directories such as 411.ca
   d) Facebook
   If lenders cannot find your business on the web they question the legitimacy of your income.
6. For a property purchase: have 10% down payment for a purchase and an additional 1.5% closing costs.  This must come from the applicant’s own resources.  It cannot be borrowed.
7. For a refinance: have at least 15% equity in your property
8. Make sure that your income taxes are paid up to date.

If you have not done all of the above for your business we can still get you a mortgage at competitive rates, but if the above is completed we can get you the best mortgage with the best rates and conditions.  At Mississauga-mortgage we specialize in mortgages for self employed applicants.

Finance Minister Jim Flaherty announced new rules aimed at preventing home buyers from getting into financial difficulty when mortgage rates rise.  He announced three major changes to mortgage insurance rules which will affect all government backed insurance programs. {Mortgages with less than a 20% down payment require the mortgages to be insured with a mortgage insurer.  The new mortgage rules affect such insured mortgages}

1. All borrowers will need to qualify at a five year rate regardless of whether they are choosing a shorter term or a variable rate mortgage.  It is unclear whether this rate will be the posted or discounted rate as we await clarity for this question.  {This is nothing new to the mortgage broker industry; we have done this for years to protect our clients}

2. Refinances will be limited to 90% Loan To Value (LTV) versus the current 95% limit.

3. Non-owner occupied properties will require a down payment of 20%.

The good news is that rumours of a required 10% down for new home buyers on their principal residence and a reduction of amortization periods to 30 years are not currently being introduced.

These rule changes are scheduled to take place as of April 19, 2010.