Are you self-employed? Consider private mortgage lending for your home.
Securing a mortgage as a self-employed individual can feel like navigating a maze. While traditional employees can easily provide pay stubs and employment letters, entrepreneurs and freelancers often face more scrutiny when applying for a mortgage.
Fortunately, private mortgage lending has emerged as a flexible solution for self-employed Canadians who may not meet the stringent criteria of traditional banks.
If you’re self-employed and planning to purchase property in Burlington or the surrounding area, understanding how private mortgage lending works can be the key to unlocking the financing you need.
Why Traditional Lenders Say “No”
When evaluating mortgage applications, major banks and credit unions rely heavily on predictable income and low debt-to-income ratios. Self-employed individuals, however, often write off business expenses to lower taxable income, making their reported earnings appear lower than they actually are. Add to that irregular income, lack of a steady paycheque, or recent business start-up history, and many lenders raise red flags.
Even highly successful business owners can be turned down due to how their income is reported. That’s where private mortgage lending offers a lifeline.
What Is Private Mortgage Lending?
Private mortgage lending refers to borrowing from an individual investor or a private mortgage corporation rather than a traditional financial institution. These lenders focus less on tax documents and more on the overall value of the property and the equity you have in it.
In Burlington’s competitive real estate market, this can be especially helpful. Private lenders evaluate mortgage applications based on common-sense criteria rather than rigid guidelines. Their goal is to assess the risk and return of lending to you, not whether your income fits into a conventional mould.
Key Advantages for the Self-Employed
Easier Qualification
Private lenders generally require less documentation. Instead of providing multiple years of tax returns or Notices of Assessment, you may only need proof of business ownership, a solid down payment, and a good understanding of your cash flow.
Flexible Income Verification
Rather than relying solely on net income reported to the CRA, private mortgage lenders may consider your gross income, business bank statements, invoices, or even contracts that demonstrate future revenue.
Speed and Efficiency
The private lending process is typically faster than traditional mortgage approval. If you’re trying to close on a property quickly — something that often happens in the Burlington market — a private lender can help make it happen.
Custom Terms
Private mortgage lending often includes interest-only options, short-term contracts (1 to 3 years), and other flexible terms designed to fit your unique financial situation. This can be helpful if you’re in a growth phase and expect to refinance through a traditional lender in the near future.
What Private Lenders Look For
Unlike banks, private lenders aren’t as focused on your credit score or income. Instead, they prioritize:
- Property value and location – Burlington real estate is in high demand, which adds to your home’s appeal as collateral.
- Equity or down payment – Typically, you’ll need at least 20-25% down.
- Exit strategy – Lenders want to know how you plan to repay or refinance the loan at the end of the term.
- Stability of your business – If you’ve been operating successfully for a few years, that’s a big plus.
Risks and Considerations
Private mortgage lending is not without its drawbacks. Interest rates are usually higher than those of traditional mortgages, as private lenders take on more risk. There may also be additional fees, such as lender fees or broker commissions, which need to be considered in your cost analysis.
That said, for many self-employed buyers, these costs are outweighed by the benefits of home ownership or the ability to access equity when needed most.
A Strategic Option, Not a Last Resort
It’s a common misconception that private mortgages are only for those in dire financial straits. In fact, many savvy business owners choose private mortgage lending as part of a broader financial strategy.
Whether it’s investing in a property, renovating a home, or consolidating higher-interest debt, a private mortgage can provide the liquidity needed to achieve bigger goals.
Why Work with a Mortgage Broker?
Navigating the private mortgage world on your own can be challenging. Working with an experienced Burlington-based mortgage broker ensures that you’re connected with trusted private lenders who understand your local market and your self-employment reality.
A broker will:
- Assess your financial picture holistically
- Match you with a lender suited to your needs
- Negotiate the best possible terms
- Help you plan your exit strategy for transitioning back to a traditional lender
Private Mortgage Lending with HW Advantage
If you’re self-employed and struggling to secure a traditional mortgage, private mortgage lending can be the flexible, fast, and practical solution you’ve been looking for.
With the proper guidance and a strong financial strategy, private lending can help you take the next step — whether that’s buying your dream home in Burlington, refinancing an existing property, or seizing a new investment opportunity.
We have relationships with over 35 qualified lenders who work with HW Advantage, giving us various options to find you the best mortgage rates in Ontario.
HW Advantage can help you land the home of your dreams. Ready to see how we can help? Contact us today or apply directly for a mortgage online.