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Self-employed Canadians looking to buy a home may soon find it easier to obtain a mortgage after the changes announced by the Canada Mortgage and Housing Corporation.
CMHC stated that the self-employed represented about 15% of the Canadian population. but they may have difficulty qualifying for a mortgage because their income may vary or be less predictable.
The changes announced last week by the federal mortgage insurance agency are aimed at giving more advice and flexibility to lenders.
In the changes, CMHC stated that several factors could be used in the future to support the lender's decision to grant a mortgage to independent borrowers who have been operating their business for less than two years or who work in the same sector. for less than two years.
CMHC stated that these factors could include such things as:
- Acquisition of Established Business
- Adequate Cash Reserves
- Predictable Profit
- Prior Training and Education
CMHC stated that, these types of applications could be accepted, provided that a "solid justification" was noted in the lender's loan file.
Document Options
In addition, the housing agency also presented a wider range of document options that could be used. meet income and employment requirements to qualify independent borrowers for a loan.
When the amendments come into force on October 1, these documents will include a notice of badessment accompanied by a T1 tax form, a proof of the income status of the Revenue Agency. Canada, and a T2125 form, which is a statement of business or professional activity.
"These policy changes respond to this reality by allowing independent borrowers to more easily obtain mortgage insurance from CMHC and benefit from competitive interest rates," said Romy Bowers, Director. commercial agency, in a statement. Borrowers who have a down payment of less than 20 percent of the value of the property that they buy are required to obtain mortgage insurance.
Cynthia Holmes, president of the property management department of the Ted Rogers School of Ryerson University. Management said the main challenge faced by potential independent mortgage borrowers today is income documentation, adding that the announced changes appear to increase the flexibility of what lenders can accept.
Young Independent
Holmes says that she is particularly pleased We are pleased that CMHC reports that it will be more flexible with regard to independent mortgage borrowers who operate their business since
" This change could especially help young self-employed workers gain access to a mortgage faster, which promotes innovation and entrepreneurship, "she said.
RateSpy.com Mortgage Comparison Web Site will apply to independent borrowers who:
- have a down payment of less than 20 percent and require high rate default insurance
- Have a down payment more than 20 percent and use a lender who insures RateSpy.com also pointed out that other default mortgage insurers, including Genworth Canada and Canada Guaranty, have programs for independent borrowers.
"These insurers have long allowed more liberal income evidence," as more flexible documentation requirements, said RateSpy in an online post.
"But unlike CMHC, Genworth and Canada Guaranty require that the borrower be in business for at least two years, in order to benefit from this flexibility."
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