Self-Employed Making Tradeoffs but Not Giving Up Real Estate Dreams

As any self-employed person will tell you, building a business can mean making some significant personal trade-offs.

A September 2007 Mortgage Intelligence survey of self-employed Canadians indicated that 49% of those interviewed have postponed real estate purchases. Another 57% have little to no retirement savings, while 51% take fewer vacations than they would like.

Even with these trade-offs, Canadians who are in business for themselves still deal with stress that is keeping them up at night. The survey revealed that 37% of the self-employed are being kept awake at night by business finance issues, followed closely by administrative matters at 32%.

The good news is that when it comes to securing a mortgage – whether to purchase a home or leverage home equity – the self-employed can now rest easy, thanks to new mortgage options that are now available to this important segment of the Canadian workforce.

Bringing it Home

When asked by Mortgage Intelligence what real estate purchases they are planning in the next three years, self-employed respondents indicated that 26% plan to buy or refinance a primary residence. Another 12% plan to purchase an income property and 10% plan to purchase a vacation property.

The good news for self-employed borrowers is that many lenders now offer a wide range of flexible mortgage solutions that don’t require detailed financial statements or income verification, instead basing approvals on personal credit history and work experience.
As well, many lenders offer a variety of flexible terms, such as longer amortization periods, accelerated payment schedules and up to 90% stated income mortgages.

While mortgage interest rates are still an important variable for the self-employed, these flexible terms are critical to reducing mortgage-related stress for entrepreneurs with an unpredictable income flow. Opting for an open mortgage with a 40-year amortization period not only lowers the amount required for monthly mortgage payments, it also enables the borrower to accelerate payments when business is strong.

As well, many self-employed people are negotiating mortgages to lower monthly payments through debt consolidation, establish a home equity line of credit for their business, renovate their home or build the ideal home office.

Work for Yourself, but Not by Yourself

If you are self-employed, you may want to consider working with a mortgage consultant to help navigate through your options and select the right mortgage for you. Today about 30 per cent of all residential mortgages are placed through mortgage brokers, up from 8 per cent in 1998, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP).

As a mortgage consultant, I am your agent working for YOU, not an institution. I will alleviate the burden of many time-consuming and frustrating tasks associated with securing a mortgage, which lets you stay focused on your business.

As someone also in business for myself, I understand that your schedule can be unpredictable, so I will work with you to establish convenient times to meet. I will strive to understand your personal and professional goals and will identify competitive mortgage solutions based on your unique profile. And, in most cases, my service is provided free of charge since I am compensated by the lender you select.

Most entrepreneurs would agree that the best business decisions are made based on a solid understanding of all the available options. By working with a mortgage broker, self-employed Canadians can gain a better understanding of how these new mortgage offerings can translate into lower monthly payments, increased financial flexibility and fewer trade-offs in pursuit of your personal and professional goals.

Linda Renaud is a Mortgage Consultant with Mortgage Intelligence in Kelowna. Linda can be reached anytime for a free consultation on the phone: 250.878.6706 or via e.mail: lindarenaud@shaw.ca Also, please do not hesitate to go to our web site for more information at: www.mortgageintelligence.ca.