Mortgage Rules Penalize Self Employed

When the Harper government changed “tightened” Canada’s mortgage rules, it disproportionately disadvantaged self employed people–everyone from a server looking to buy her 1st home to a seasoned entrepreneur/business owner looking to add to his/her real estate investment portfolio including buying a place for his/her business to operate out of.

Why is that?

Capital Mortgages broker Sean McCormick explains:

Under former PM Harper, Canada’s finance minister changed lending guidelines under a program called B20 and B21:

-LTV, loan to value ratios for refinances and many new purchases were reduced to 80%, instead of 85–90%*

-it became more difficult for self-employed persons to get any kind of mortgage

-lending guidelines were tightened: for example, for commission salespeople, only net income qualifies.

This is just to name a few rule changes that have hurt the self employed, commission earners and those who survive on tips. Their net income can often be quite low after deducting allowable expenses so getting them financed is not easy.

I hope the lending environment will loosen up again; it usually comes in cycles. It may take a year or two though. My thought is that Canada’s new prime minister (Justin Trudeau) may decide to help this sector at some point.

Cheers,

Sean McCormick Mortgage Broker 1-877-209-1444 

the simplest answer is usually the best answer

Thanks Sean.

Justin, you hearing us?

@ profbruce @ quantum_entity

* or even 95% for 1st time homebuyers