Mortgage Blog

Unlocking Homeownership: The Ultimate Guide to Getting a Mortgage as a Self-Employed Business Owner in Calgary

May 3, 2023 | Posted by: John Antle - Trusted Calgary Mortgage Solutions

There are several benefits to owning a home as a self-employed business owner in Calgary:

Building Equity

Owning a home is one of the most effective ways to build wealth. As you make mortgage payments, you build equity, which is the difference between the value of your home and the amount you owe on your mortgage. Over time, your equity can increase, providing you with a valuable asset that can be used for future investments or retirement.

Tax Deductions

Self-employed business owners can deduct mortgage interest and property taxes on their tax returns, which can significantly reduce their tax bill. In addition, if you use your home for business purposes, such as a home office, you may be eligible for additional deductions.

Stability

Owning a home provides stability and a sense of permanence. You don't have to worry about a landlord raising rent or ending your lease, and you have control over your living space. This can be especially important for self-employed business owners who may need a dedicated space for their business.

Financial Security

Owning a home can provide financial security, as you have a valuable asset that can appreciate over time. This can help you weather economic downturns or provide a source of income in retirement.

Tips for Getting a Mortgage as a Self-Employed Business Owner in Calgary

Getting a mortgage as a self-employed business owner can be more challenging than it is for traditional employees. However, with some preparation and planning, it is possible to secure a mortgage. Here are some tips to help you get started:

1. Organize Your Finances
Before applying for a mortgage, it's important to organize your finances. This includes gathering your tax returns, bank statements, and any other financial documents that lenders may require. You'll also want to review your credit report to ensure there are no errors or issues that could impact your credit score.

2. Build Your Credit Score
Your credit score is an important factor in securing a mortgage. Lenders use your credit score to evaluate your creditworthiness and determine the interest rate you'll qualify for. As a self-employed business owner, you may not have a traditional employment history, so your credit score will be even more important. Take steps to build your credit score, such as paying down debt and making payments on time.

3. Maintain Consistent Income
Lenders want to see consistent income when evaluating mortgage applications. As a self-employed business owner, your income may be less predictable than that of a traditional employee. However, if you can demonstrate a consistent income over the past few years, lenders may be more willing to work with you.

4. Prepare a Solid Business Plan
Lenders want to see that your business is stable and has a solid plan for the future. Prepare a detailed business plan that outlines your revenue, expenses, and growth plans. This can help lenders evaluate the viability of your business and determine your ability to repay the mortgage.

5. Work with a Mortgage Broker
Working with a mortgage broker can be a valuable resource for self-employed business owners. A mortgage broker can help you navigate the mortgage process, identify lenders who specialize in working with self-employed business owners, and help you prepare a strong mortgage application. They can also help you understand the different types of mortgages available and the pros and cons of each option.

6. Be Prepared to Provide Additional Documentation
As a self-employed business owner, you may be required to provide additional documentation to support your mortgage application. This may include business financial statements, profit and loss statements, and income tax returns. Be prepared to provide any additional documentation that lenders request.

7. Consider a Co-Signer or Joint Application
If you're having difficulty securing a mortgage on your own, consider a co-signer or joint application. A co-signer is someone who agrees to take responsibility for the mortgage if you're unable to make payments, while a joint application involves applying for a mortgage with a partner or family member. Both options can help you increase your chances of being approved for a mortgage.

Conclusion

Getting a mortgage as a self-employed business owner in Calgary can be challenging, but it's not impossible. There are many benefits to homeownership, and with some preparation and planning, you can successfully secure a mortgage. Remember to organize your finances, build your credit score, maintain consistent income, prepare a solid business plan, work with a mortgage broker, be prepared to provide additional documentation, and consider a co-signer or joint application if needed. If you're interested in learning more about getting a mortgage as a self-employed business owner in Calgary, don't hesitate to contact us for more information.

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