Common Mistakes Self-Employed Borrowers Make When Applying for a Private Mortgage?

Are you self-employed and planning to apply for a private mortgage in Calgary? If so, you should work with a professional private mortgage lender in Calgary for self-employed borrowers.

Self-employed individuals do not have regular pay stubs or T4S; thus, many lenders in Canada tend to view them as higher risk. That is why it is important to work with an expert mortgage advisor who will help you navigate the process of a private mortgage in a hassle-free way.

What are the Common Mortgage Mistakes to Avoid?

• Underreporting of Income: One of the most common mistakes a self-employed borrower makes is minimizing their taxable income to reduce tax liability. While this might help during tax season, it becomes a major hurdle when applying for a mortgage. The private lenders focus on the income proof, stability, and if your reported earnings are low, your application may not meet the lending criteria. 
• No Proper Documentation: The private lenders require documentation like Notice of Assessments, bank statements, business licenses, and P&L statements. A common mistake is submitting incomplete or inconsistent documents, which will delay or deny the application. To avail a private mortgage for self-employed individuals in Calgary, one must maintain proper self-employed mortgage documentation. Have a mortgage consultant who will help you organize your financial documents ahead of time to ensure they are complete and consistent. 
• Not Separating Personal and Business Finances: Blurring the lines between your personal and business accounts makes it hard for lenders to understand your true income and expenses. It also raises a red flag regarding financial management. Self-employed borrowers should open a separate business account and track all business-related expenses and income properly.
• Ignoring Credit Score: One of the important mortgage tips for self-employed borrowers is not to ignore their credit score. Some borrowers focus only on income and forget that credit scores and debt-to-income ratios matter, even for private lenders. A low credit score or high existing debt can lead to unfavourable loan terms or rejection. It is important to regularly monitor your credit report and minimize outstanding debts before applying.
• Choosing the wrong Lender: Many self-employed lenders approach traditional banks or lenders who may not cater to the non-traditional income earners. Others secure a mortgage on their own. It is advisable to work with a professional mortgage broker, experienced in private lending for self-employed borrowers. The experts will connect you with the reliable lenders who understand your income structure and offer flexible terms.
• Ignoring Budgeting and Pre-Approval: Many self-employed borrowers jump into the property without a proper pre-approval or understanding of what they can afford, leading to potential financial strain and disappointment. It is advisable to get pre-approved before house hunting. This gives a clear picture of your budget and ensures good bargaining power with sellers.

When seeking how to get a Mortgage when Self-Employed in Calgary, consult a professional mortgage advisor who will help you secure private mortgage financing easily.