This is probably the biggest positive mortgage lending change in 10 years. A major lender has just announced a new program for self-employed individuals!
For the last several years, mortgage lenders were not including any business income when qualifying for a mortgage.
In other words, if you owned a business – let’s say a computer store – and your business made $400,000 net income per year, but you only needed to pay yourself $100,000, you’d pay business income tax on that business income (for those who think businesses don’t pay tax, they certainly do). You’d also pay personal income tax on the $100,000 that you drew out of the corporation.
So, how much does this person really earn? Most of us would say $400,000. But banks would only use the $100,000 that was pulled out of the corporation and exclude the other $300,000. It’s like the $300,000 didn’t exist. Nice, huh?
This is why the self-employed have been facing challenges when qualifying for a mortgage over the past 5-7 years…
RateSupermarket.ca’s annual Best of Finance Awards recognizes the best credit cards and banking products in Canada.
We here at RateSupermarket.ca understand certain financial decisions can be daunting. You’re protective of your hard-earned cash and you don’t want it to go to waste. That’s why we strive to help every Canadian find the mortgage, credit card, bank account, loan or investment product that best fits their lifestyle and budget.
In doing such, we annually audit Canadian credit cards and banking accounts to see how they stack up against each other.
The Best of Finance Awards recognizes some of the top products in the personal finance industry, and helps you – the consumer – ultimately find your best match.
In selecting the top nominees for each category, we examined dozens of products and took various factors into consideration, such as points, miles, interest rates, balance transfer rates and annual fees. We then converted all figures into cash to see which products put the most money in your wallet…