It can be very challenging to obtain a mortgage if you’re self-employed or a seasonal worker looking to buy a property or refinance your mortgage. That’s because it is difficult to confirm your revenue. If you are paid on commission, there may be months in which you record no income. In this case, a no-income mortgage is the best option.
In a no-income verification mortgage, sometimes called a stated-income mortgage, the borrower is exempt from submitting customary documentation of their income, such as tax returns or pay stubs. Instead, the borrower only declares their salary on the mortgage application, and the lender accepts this information as accurate.
A no-income verification mortgage makes borrowing easier, but navigating the mortgage market can sometimes be intimidating. It’s simple to qualify for one; all the private lender needs to do is confirm essential criteria, such as your work status, credit score, and mortgage amount, to determine how much you can borrow.
You still have some papers to submit. These could include tax returns, bank statements, account information, other confirmed assets, or alternative sources of income like government assistance or rental income. You demonstrate that you have the money to sustain the monthly payment. Still, you may need to confirm your source of funds or provide the necessary income documentation to complete the standard mortgage application procedure and receive home equity loan BC approval.
The more challenging aspect is locating a lender open to accepting one. It’s crucial to remember that not all financial institutions provide this option. At this point, getting in touch with a trustworthy mortgage professional is a good option because they frequently have connections that can help you find the ideal lender.
Things to remember before applying for a no-income mortgage
1. Check your credit score before applying.
Your credit score plays a big part if you’re trying to get approved for an alternative mortgage without verifying your income. Therefore, quickly check your credit score before applying. Ensure your credit score is as close to exceptional or good as possible.
Pay off past-due invoices and confirm that your debt-to-income ratio (44%) is within the advised range. Discuss any unfavorable information on your credit report that you believe could hurt you with your mortgage broker.
2. Provide all the necessary documents you have
A Mortgage with no income does not completely absolve you of the need for supporting evidence. You must still demonstrate to the lender that you can repay the loan using whatever additional documentation you have.
Cash flow, property equity, and tax returns are all included in this. Certain mortgage providers may also accept bank statements and other financial records proving your salary. You might need the necessary income documentation even while you have the funds to meet your monthly payments. Find out from your mortgage broker what documentation they need to support your income narrative.
3. Make a sizable down payment.
Depending on your financial situation, a sizable down payment is another way to surpass a mortgage loan’s income verification requirement. Making a sizable down payment demonstrates to private lenders in Vancouver that you have sufficient funds to meet the obligations of a mortgage.
20% is the typical down payment on a house. If you can surpass that to go around the loan’s income verification requirement, your chances of getting approved will increase.
4. Anticipate an increase in interest rates.
The difficulty with a mortgage that doesn’t require proof of income is that you ask the lender to take a chance on you. If lenders cannot verify your yearly take-home pay, they will often apply a higher interest rate. This could imply that if you are a high-risk borrower, you would initially pay a higher interest rate.