Are you self-employed and are finding it difficult to get a mortgage?
We had a recent case come across our desk where a self-employed client was looking to refinance his house for $550,000. He claimed 30,000 a year on his taxes and his bank told him that he would need to claim two consecutive years of $100,000 to qualify.
His company made good money but like many self-employed people, he utilized the tools from his accountant to make sure he did not pay as much in taxes.
We came up with an ALTERNATE LENDER that charges a little bit more in interest (in this case 1% higher per year) and a 1% fee up front.
Scenario 1 (what your bank suggests) – Claim $100,000 a year in income but get the best rates Year 1 Taxes = $25,374 Year 2 Taxes – $25,374 Interest for 2 years = $20,612 Total = $71,360
Scenario 2 (what Browne Mortgages suggest) – Continue to Claim $30,000 a year but pay a little higher in interest
Year 1 Taxes = $4,619 Year 2 Taxes = $4,619 1% Lender Fee = $5,500 Interest for 2 years = $31,290 Total = $46,028
In this case, the client took our broker’s advice and chose scenario two, saving them $25,332. On top of that, he was able to qualify for the mortgage right away instead of having to wait 2 years.
While getting the best rate is nice and often suggested by major banks, it might not always be the best thing for you. Reach out to our team today to discuss your unique situation and see how we can save you money and help you to qualify faster!