Featured Listing:
7 Cassie Cresent
Strathroy ON
Self-Employed Means Creative Lending
Self-employed homebuyers have historically presented a challenge to realtors when dealing with conservative lenders. But many self-employed Canadians are now realizing their goal of home ownership, and there are more self-employed individuals in this country than ever before.
According to Statistics Canada, in the 1990's, self-employment accounted for 3 out of 4 new Canadian jobs, and by 1997, over 2.5 million Canadians ran their own businesses, which is 16% of the labour force. The numbers continue to rise, and 88% of those who are self-employed make the choice to be self-employed freely, not forced by unemployment. The most common reason for starting a business is independence. Statistics Canada show that 45% of the self-employed earned less than $20,000 in 1995, compared with 26% of paid workers. But many self-employed people with home-based businesses have tax advantages as well as lower overhead and commuting costs, which help with the bottom line. On the other side of the coin, in 1995, 4% of those self-employed earned in excess of $100,000 per year, compared with 1% of paid workers in this income bracket. Frequently, self-employed buyers have a spouse who is employed, which always helps in qualifying for financing.
Self-employment is becoming particularly attractive to workers aged 55 and over who are nearing retirement age and want to take more control of their lives. From 1997 to 1999, the number of older workers increased by almost 20%. This could be the leading edge of an important trend as the first of the Canada's 9.8 million baby boomers turned 50 in 1997. If people ignore retirement age and continue to work into their 60's and 70's and beyond, they will have more spendable income for housing and other services they may need. In increasing numbers, these are the buyers who are who are downsizing and moving into urban centres.
Once it was difficult to qualify self-employed people for a mortgage, but that has changed. Mortgage brokers such as the ones associated with Sutton Mortgage Corporation can help buyers with an atypical income find the financing they need. Many lenders such as credit unions have more flexible approaches to funding than banks. But even the banks are more interested in small business owners and self-employed individuals these days. According to Jamie Fecteau, Director of Finance Products & Services for the newly launched Sutton Mortgage Corporation, "Lenders are definitely responding to changing employment patterns and are being much more flexible in qualifying and even pre-qualifying self-employed individuals who are in the market to purchase real estate. Our Mortgage Specialists have been very successful in finding lenders who respond favourably to atypical buyers. Of course, personal service, experience and creativity are the key to finding the right lender for the buyer."
