Helen Gambling  'A Sure Bet in Real Estate'

Personal Real Estate Corporation


(604) 466-2838
 

How to qualify for a mortgage when you're self-employed

 

Ten years ago 387,200 British Columbians were self-employed. Today, this number has
increased by 18 to 416,500. Nearly one in every five British Columbians now works
for themselves. When it comes time to getting a mortgage or refinancing an existing
rnortqaqe, self-employed workers are treated differently from salaried employees.


Who is self-employed?

 

Typically, lenders at financial institutions consider someone self-
employed if they:

 

  • run a business alone as a sole proprietor, with a partner, or as a corporation;
  • receive 25 or more of their income from the business; 
  • work on short contracts for different employers; or
  • are paid solely on a commission basis.

 

In contrast, a salaried employee is someone who receives a
regular paycheque from an employer, or even several paycheques
for part-time work for multiple employers.

 

Different rules for the self-employed

 

Since 2011, the federal Department of Finance has imposed
a range of stricter rules on mortgages for all borrowers, for
example:

  • reducing maximum amortization periods to 30 from 35 years;
  • restricting the percentage borrowers can refinance; and 
  • requiring borrowers with less than a 20 downpayment to meet standards for a five-year fixed rate mortgage.

 

For the self-employed, new rules brought in two years ago
by Office of the Superintendent of Financial Institutions require
anyone working for themselves applying for a mortgage or
refinancing from a federally-regulated financial institution to
have a minimum downpayment of35 ofthe home price.

 

The mortgage must also be insured by Canada Mortgage and
Housing (CMHC), Genworth or Canada Guaranty.

 

Credit Unions, however, are not federally regulated and may
require self-employed workers to have a downpayment as low as
20 without requiring mortgage insurance.

 

Self-employed need proof

 

Self-employed borrowers will have to prove they have a viable
business, a good credit rating and a good history of paying bills
and loans on time.

 

Borrowers in business for three or more years are required
to verify net taxable income - what remains after business
deductions are subtracted from gross earnings.

Lenders will want to see the past two years of these documents:

  • monthly bank statements;
  • Canada Revenue Agency assessment notice; 
  • business balance sheet and profit-and-loss statement; 
  • business credit card statements; and
  • credit references or letters from financial institutions.

 

Lenders may also ask for a letter from the borrower's
accountant, proof that rent is paid on time, and a personal balance

sheet showing assets such as stocks, and debts such as credit card 

or car loans.

 

Self-employed borrowers in business for three or more years
are required to verify net taxable income - what remains after
business deductions are subtracted from gross earnings.

 

Self-employed borrowers in business for less than three years
will also be required by CMHC (or other mortgage insurers)

to complete a stated income application. For information on
CMHC's program for self-employed, see: www.cmhc.ca/enl
hoficlincllmoloin/hopriupload/CMHC-Self-Employed.pdf

 

Averaging net income

Just because a self-employed worker had a net income of
$120,000 the previous year, does not mean they will qualify for a
mortgage based on this amount.

 

Instead, a lender determines the amount a self-employed
borrower will qualify for by reviewing several years of earnings
and averaging them.

 

For example, a self-employed borrower's income for the last
three years might be analyzed as:

 

Year

Net Income

2013

$120,000

2012

$80,000

2011

$30,000

 

Average net income = $76,666

 

The lender will base the amount loaned on the average income
of$76,666.

 

Source: Real Estate Board of Greater Vancouver

 

 

Post CommentComments: 0Read Full Story

Home sales and listings continue to follow historical averages


VANCOUVER, B.C. - March 4, 2014 - In the first two months of 2014, the Greater 

Vancouver housing market has maintained the steady pace set throughout 2013.

 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in
Greater Vancouver reached 2,530 on the Multiple Listing Service® (MLS®) in February 2014.
This represents a 40.8 per cent increase compared to the 1,797 sales recorded in February 2013,
and a 43.8 per cent increase compared to the 1,760 sales in January 2014.

 

Last month's sales total mirrors the 10-year sales average for February of 2,547, with just 17
sales separating the two figures.

 

The sales-to-active-listings ratio currently sits at 18.9 per cent in Greater Vancouver, a 4.9 per
cent increase from last month.

 

"Home buyer demand picked up in February, which is consistent with typical seasonal patterns
in our housing market," said Sandra Wyant, REBGV president. "We typically see home buyers
become more active in and around the spring months."

 

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,700
in February. This represents a 2.8 per cent decline compared to the 4,833 new listings reported in
February 2013 and a 12.1 per cent decline from the 5,345 new listings in January. Last month's
new listing count was 0.5 per cent below the region's 10-year new listing average for the month.

 

The total number of properties currently listed for sale on the Greater Vancouver MLS® is
13,412, a 9.3 per cent decline compared to February 2013 and a 6.4 per cent increase compared
to January 2014.

 

"With the market continuing to perform at a steady, balanced pace, it's important for home
sellers to ensure their homes are priced correctly for today's conditions," Wyant said.

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro
Vancouver is currently $609,100. This represents a 3.2 per cent increase compared to February
2013.

 

Sales of detached properties in February 2014 reached 1,032, an increase of 46.6 per cent from
the 704 detached sales recorded in February 2013, and a 6.3 per cent decrease from the 1,101

units sold in February 2012. The benchmark price for detached properties increased 3.5 per cent
from February 2013 to $932,900.

 

Sales of apartment properties reached 1,032 in February 2014, an increase of 35.8 per cent
compared to the 760 sales in February 2013, and a 1.2 per cent increase compared to the 1,020
sales in February 2012. The benchmark price of an apartment property increased 3.6 per cent
from February 2013 to $373,300.

 

Attached property sales in February 2014 totalled 466, an increase of39.9 per cent compared to
the 333 sales in February 2013, and a 9.9 per cent increase from the 424 attached properties sold
in February 2012. The benchmark price of an attached unit increased 0.6 per cent between
February 2013 and 2014 to $458,300.

 

 

 

 

 

Post CommentComments: 0Read Full Story

Home sale and listing activity continue to chart a steady path for the region's housing market


VANCOUVER, B.C. - April 2, 2014 - March home sales in Greater Vancouver outpaced last
year's total yet lagged the region's historical average for the month.

 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in
Greater Vancouver reached 2,641 on the Multiple Listing Service® (MLS®) in March 2014.
This represents a 12.5 per cent increase compared to the 2,347 sales recorded in March 2013, and
a 4.4 per cent increase compared to the 2,530 sales in February 2014.

 

Last month's sales were 17.2 per cent below the 10-year sales average for March of 3,190.

 

The sales-to-active-listings ratio currently sits at 18.2 per cent in Greater Vancouver, which is
unchanged from last month.

 

"We continue to see steady and stable market conditions across the Greater Vancouver housing
market," said Ray Harris, REBGV president. "There has been a consistent balance between
home seller supply and home buyer demand in our marketplace over the last year."

 

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,281
in March. This represents a 9.1 per cent increase compared to the 4,839 new listings in March
2013 and a 12.4 per cent increase from the 4,700 new listings in February. Last month's new
listing count was 5.9 per cent below the region's 10-year new listing average for the month.

 

The total number of properties currently listed for sale on the Greater Vancouver MLS® is
14,472, a 6.4 per cent decline compared to March 2013 and a 7.9 per cent increase compared to
February 2014.

 

"Home prices in the region have experienced incremental gains in most areas and property types
over the last 12 months," Harris said. "It's important to remember that this is a diverse
marketplace and trends will vary depending on area and property type."

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro
Vancouver is currently $615,200. This represents a 3.7 per cent increase compared to March
2013.

 

Sales of detached properties in March 2014 reached 1,116, an increase of 19.6 per cent from the
933 detached sales recorded in March 2013, and a 5.7 per cent decrease from the 1,183 units sold
in March 2012. The benchmark price for detached properties increased 4.2 per cent from March
2013 to $945,400.

 

Sales of apartment properties reached 1,106 in March 2014, an increase of 12.6 per cent
compared to the 982 sales in March 2013, and a 7.1 per cent decline compared to the 1,191 sales
in March 2012. The benchmark price of an apartment property increased 3.8 per cent from
March 2013 to $375,800.

 

Attached property sales in March 2014 totalled 419, a 3 per cent decline compared to the 432
sales in March 2013, and a 16.2 per cent decline from the 500 attached properties sold in March
2012. The benchmark price of an attached unit increased 1.3 per cent between March 2013 and
2014 to $460,100.

 

 

 

Post CommentComments: 0Read Full Story