Self-Employed Options Part 2

Are you self-employed? I have some potentially bad news for you: two lenders cut you out from getting mortgage financing with them abruptly as of last night at 12 midnight. Rest assured, there are many lenders that will still finance Business-For-Self clients (BFS) but don’t sit around and wait for them to welcome you with open arms. Why? In my opinion this is a sign of thing to come as we are continuing to see the effects of the newest mortgage rules from 2012 take shape.

Let’s talk about your self-employed borrowing options available today:

If you have less than 20% down then you only really have one option: insured-backed mortgage financing. This carries a higher mortgage insurance premium and a minimum of 10% down. This type of financing is available through many lenders, most of which charge a rate premium as well. So not only is your mortgage rate higher, your cost of borrowing is also because your insurance premium is almost double of what a normal full-time employed borrower pays.

If you have more than 20% down but less than 35% down then you’ve got two options: uphill or easy street. Uphill is going through an “A” lender which offers “A” rates but you still will (probably) have to pay CMHC or Genworth BFS insurance premiums and maybe higher rates by a few basis points. If you want to go on Easy Street then there are a few lenders who’d love to work with you. Home Trust, Equitable Trust, Equity Trust to name a few. These lenders almost always charge a fee, higher rates, and their appraisals are a lot tougher. That said, qualifying for these loans is easier.

If you have more than 35% down then the “A” side is still an option for you with…

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