Since most lenders want to verify the income during the mortgage application process. Often a business owners tax return, business financial statements and records of business activities are used as methods of verification when the claimed income provides enough to warrant qualification for the mortgage being requested. Many lenders will want to insure it through CMHC or Genworth.
But what happens when your taxes don’t represent your income or you don’t have financial statements? What if a lot of your deals are cash?
FEAR NOT!!! There are options for you too!
Here are a few
1. If you have a good credit rating, history and have been in business for several years many lenders use “stated” income programs where they will use a “reasonability” test to determine what the average income should be for your industry. Most will want to insure these mortgages and will use flexibility within government regulations and their companies policies to help with the approval process.
2. For those who have “blemished” credit histories or don’t qualify for “A” type lenders, we have “alternative” or “B” lenders. They will give the loan based on your stated income and the strength of your property and equity in the home. Often they charge a fee to use their services and brokerage fees may also apply. Rates are a little higher but not ridiculously high. This isn’t usually considered as a hardship considering the write offs enjoyed by the small business owner.
3. And last but not least, we have the private mortgage markets. These are lenders who will loan mortgage money under more “difficult” situations. Often there are credit problems, property issues and many situational issues. Since these lenders charge much higher rates and fees they are usually used as a short term solution while the issues are being fixed. Such as undergoing credit repair. These lenders will also loan second mortgages when necessary, also a short term solution.
But regardless of what the general options are, every situation is different and your mortgage broker will tailor make a plan that best suits you.
