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What self-employed people need to know about buying a home

Self-employment is on the rise in Canada
040419-real estate-for sale-realtor
(stock photo)

Self-employment is on the rise in Canada.

"Specifically here in Halifax and in Nova Scotia we have a lot of self-employed people. And more and more Canadians are becoming self-employed every day," says mortgage broker Clinton Wilkins.

November is Financial Literacy Month, and Wilkins has tips to help self-employed Canadians who want approval for a mortgage.

"I'm self-employed so I know what the struggles are," he tells NEWS 95.7's The Todd Veinotte Show.

Wilkins says one of the main issues is that if you work for yourself, you may not have the most consistent of incomes.

"We love looking at a two-year average, because then the lenders really know kind of what you're average income's going to be," he explains. "We'll average their tax returns and figure out what their average income looks like, and that's the income that we'll use in that mortgage application."

The mortgage broker says this is also beneficial for seasonal workers, or people who have a base salary but make a large commission or bonus.

Wilkins says that with self-employment, it is sometimes harder to get a typical broker at a bank branch to approve your lending.

"They're a little bit more complicated and the normal bank branches are getting away from doing those more complicated files," adds.

But Wilkins says that uniqueness is part of the job and he loves that each file is different.

"There's so many different types of self-employment out there," he says. "And I think that's what makes it so interesting for me. Because every file is like a snowflake, it's different."

Wilkins, who works with 40 different lenders, says that they all value three things: credit, assets and income.

"We all know when we're self-employed, we want to claim as little net income as we can, because no-one wants to pay income tax," he laughs.

But if you don't claim enough money, on top of being illegal, Wilkins says it could also affect your mortgage.

"If you don't have the income on paper, you may have to pay a higher rate," he explains.

For many self-employed people, Wilkins says it's common to go through alternative lenders.

"Typically the rate is about one or two per cent more than a normal client would pay," he says. "But that's the price of doing business."

But Wilkins says it's easy to re-finance once you've been making regular payments for a while.

"It may not be an alternative source forever, but maybe it's one or two years at a higher rate and then we can get you into a more traditional product," he adds.

Wilkins says about 30 per cent of his clientele are self-employed, and he's always willing to take on new clients.

"We love alternative lending because often times we're able to help people that might not have been able to have been helped otherwise."

For more information visit teamclinton.ca.


Victoria  Walton

About the Author: Victoria Walton

Victoria is HalifaxToday.ca's weekend editor and a Halifax-based freelancer. She is originally from Nova Scotia's Annapolis Valley.
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