Being able to budget while on a flexible income is tricky. It’s the reason my husband and I have never applied for a mortgage, we rent our house. We just assumed the banks would laugh at us if we were to apply. We assumed we would be too risky of a loan for them. Both of us work for ourselves… some months are banner on the cash flow and some months are dry. That’s just the cycle of entrepreneurship in our house.
Of course, the goal is to eliminate the dry spells, but there will always be quiet times of the year when business slows down.
So how do you approach a bank and show them that you are able to pay a mortgage when you are on a flexible income?
Enter Marcy Berg from Mortgages4women.ca.
She and I have had lengthy chats about entrepreneurs and mortgages. I think the one point that resonates the most with me is that the risk needs to be removed to have a good mortgage. What does this mean? The less risk in your financial portfolio that you present to the bank when applying for a mortgage, the lower the interest rate the bank will give you.
That makes total sense. But how do you present as low risk when you don’t have a steady employer, a steady monthly paycheque, or a steady job contract? Easy, says Marcy. You talk to a lender in their language.
I speak entrepreneur, I don’t speak bank.
She took it one step further. The bank wants to see your proof of earnings over the last 2 years. This can be found on your Notice of Assessment from the Government. After you file your taxes, they send you the Notice of Assessment which states your taxable income. That is one of the numbers the bank wants to see. They will also be interested in your Statement of Business Activity – also from your taxes. Once this information is provided, then the banks have a foundation to work with.
But you see, that is only the tip of the iceberg. There are many other variations and methods for entrepreneurs to apply for a mortgage. Don’t take it from me. Ask Marcy. She speaks both entrepreneur and bank. The best thing about working with Marcy is she gets it. She just gets everything and has seen everything and nothing fazes her. You will not be judged by Marcy, you will be listened to, heard and dealt with respectfully. That’s one of the many reasons why we love her so much.
She believes so much in women entrepreneurs that she is one of our sponsors for the year. She gets entrepreneurs and she can help you. Don’t sit there with financial questions and worries. Reach out. Go on, give her a call. The worst she can do is help.