Is financing getting tougher for the self employed?

It seems that more and more Canadians are self employed.

The self employed tend to have less steady income then full time employees and as a group it can be more difficult to get a mortgage or refinancing.

As a self-employed website developer who had recently restructured his business, Greg Schmidt knew that refinancing his mortgage wasn’t going to be a piece of cake.

“I had a little bit of a line of credit built up from shifting the focus of the business and my car lease had come up for being bought out, so I needed money to take care of that,” said Mr. Schmidt, a single 42-year-old who owns a home in Toronto that includes an apartment for income. “It turned out the best way to go was to do a new mortgage, increase the amount of the old one and take care of those costs.”

However, when he approached his bank, he was told “the numbers didn’t work for them.”

Read the full article in the Globe and Mail.

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Ralph Cramdown
Guest
Ralph Cramdown

Yep, it turned out the best way to go was to roll his formerly tax-deductible interest payments and car expenses into his big amortizing, non-deductible, non-readvanceable one.

And I must echo a mocking comment from the soon-to-be-dead Globe comments section — Restructuring? The guy’s a web developer; all he needs is a clean shirt and a laptop!

Anonymous
Guest
Anonymous

“when he approached his bank, he was told “the numbers didn’t work for them.”

What were the numbers? You’d think they would give a hint. Self employed web developers could make 2K per year or they could make 100K per year.

"A Sharp" Accountant
Guest
"A Sharp" Accountant
“restructure”? (that’s kind of a vague word). More details please! Anyway, his re-fi problems could be from many sources. Maybe he is just making less money…and had restructured his approach as a result of that. Banks care about GDSR, TDSR, security offered, and other soft issues like history with them and credit scores. Sometimes things change and the numbers dont always work. Maybe before he did more of a “stated income” type deal, and now they are looking at income. On the other hand, maybe he makes great moneu, and performed a miniature tax-reorg “section 85’ing” his self employment assets into a corporation to defer tax on money earned that he did not need to spend at the time, etc. If you restructure this way, you will show lower income on all lines of your T1. All banks treat this… Read more »
Can't wait
Guest
Can't wait

looks like the credit taps are closing for the COCS – Caucasians on credit, lol.

Makaya
Member
Makaya

@Can’t wait: “looks like the credit taps are closing for the COCS – Caucasians on credit, lol.”

Can you give us a break with your bigotry and racism? Thanks.

Turkey
Guest
Turkey

From Ben Rabidoux’s latest post (with a hat-tip to Mike Fotiou):

This graph shows the difference between nationwide “raw” sales figures and the “seasonally adjusted” sales figures over the past 20+ years. We’ve broken a record with last month’s “seasonal” adjustment.

Discussion over whether last month’s adjusted sales statistics were cooked or not should start and end with this graphic.

Turkey
Guest
Turkey

@Turkey: Argh. Image worked in preview, but not in final post. Look here.

Mick Murphy
Guest
Mick Murphy

@Makaya:

I agree it’s annoying to see this person, who seems to think they are funnier than they really are, push the acronym COC (Caucasian on credit), i don’t think it’s racist.

And if it is racist, it’s no more so than HAM and suggestions that asian money is driving the market, and descriptions of the number of asians lining up for pre-sales.

Either this board already full of anti-asian racists, in which case who cares about an anti-white racist, or these terms are simply descriptive in which case who cares?

kenny
Guest
kenny

“looks like the credit taps are closing for the COCS ”

yup. crying and whining already started in G&M, next stop. CBC and Global..”bank told me that numbers don’t work buuuu” ….of course moron get a fuking job..dot com bullshit javascript rollovers do not count anymore

painted turtle
Guest
painted turtle

Does he ‘OWN’ his home?
I am not sure we all share the same definition of this word 😉

This morning on CBC radio: ‘the RE market is finally picking up’ !?!??!?! WTF?
No explanation whatsoever…
This is quality journalism at its highest!

Phillip
Guest
Phillip

And here I thought COC was Chinese on Credit? Caucasians… Chinese… seems taps are closing for Canadians on Credit, if you ask me.

jesse
Member

“COCS”

Hey you know what, a big portion of my income is, in effect, “Hot Asian Money” because it is generated based on productive output from Asia.

Turkey
Guest
Turkey
Ladies and gents, I present: The Most Delusional Listing Ever. “But,” you protest, “there’s no content! No images, no write-up!” The Google street view gives you the general idea: cars up on blocks, a pit bull, surrounded by warehouses. The house seems pretty trashed, and the yard’s a disaster. If you could zoom in far enough, you’d see a prominently displayed box with an American Body Armor logo. Trucks, and the nearby fire hall, use the route frequently. There was a pretty major police incident at the house earlier this year. $1.1M for this? If you think the property has development potential, think again. All three levels of government, plus the Port of Vancouver, plus the rail companies, have a medium-term plan to redirect traffic from Prior along what they call the “Malkin Connector”. It’s possible the property will be… Read more »
Anonymous
Guest
Anonymous

@Makaya: you should also voice your concern to those who anti-asians in this blog; everything goes both ways.

TNT
Guest
TNT

Scary housing market of horrors.
Trick but no Treat.

Boo hoo.

good-format
Guest
good-format

Just overheard my co-worker turned into an accident landlord.

Tried to sell his old property at Coquitlam after purchasing a big one at Surrey. 4 months passed without even 1 offer.

He is day-dreaming to sell for more next year.

S3v1n
Guest
S3v1n

@good-format: COC or HAM?

Patiently Waiting
Member
Patiently Waiting

“Owner is looking for tenant who cares and maintains the unit following maintenance manual. No Pets, No Smoke. No oil fry cooking,”

http://vancouver.en.craigslist.ca/van/apa/3332875369.html

$1530 for 467sqft, and you expect the tenant to maintain the place and you tell the tenant what they can cook in their own home.

I should rent this place, bring in the nastiest pitbulls I can find, and invite the entire DTES for the biggest smoke-a-thon and deepfry cooking contest you’ve ever seen (don’t worry about the lack space, there’s room in the halls). Then I’ll make the landlords life endless stress as I’d demand my damage deposit, and get it back (twice over) because they don’t know the rules. Finally, I’d gather all information I have about the landlord, and call the CCRA just for the helluvit. 🙂

patriotz
Member
JR
Guest
JR

@Patiently Waiting: “No oil fry cooking” I can almost understand this. They aren’t saying no cooking, just no deep frying. My wife almost divorced me our place stunk so bad from my failed attempt to make pakora.

Many Franks
Guest
Active Member
Many Franks
Yeesh, this seasonal adjustment stuff is really pernicious. See e.g. Propertywire.com: Property prices and sales in Canada rise again after new mortgage rules slowed the market Residential real estate sales picked up in 60% of local markets in Canada last month as the sector bedded down with changes to the country’s mortgage rules. […] Activity picked up in about 60% of local markets in September, including Greater Vancouver, Calgary, Edmonton, Greater Toronto, and Quebec City. Calgary and Quebec City were the only two large markets where new listings eased in September, with declines of less than 2%. Hey, great! The gravy train is rolling again. Actual, not seasonally adjusted, activity however, remains down 15.1 % from the same time last year with more than half of all local markets posting declines of at least 10%. Wait, WHAT? And here I… Read more »
victoria
Member
victoria

Checking out listings here in Victoria….

One house is for sale. Assessed value $556,000 but they are trying to sell it for $1,700,000.

Three years old.

Do people really do that – triple the assessed value?

yvr2zrh
Member

@S3v1n:

If it makes us feel any better – – imagine a small Chicken when hearing the pronounciation of our seemingly new but dividing acronym . . . . .

Someguy
Guest
Someguy
camper
Guest
camper

If you are self employed it is a good idea to have a long term relationship with one commercial lender. Use them for everything, including mortgage and car loans. Keep them up to date occasionally on how you are doing so they are familiar with your business. Keep your credit rating clean. Bankers don’t like surprises so when you need them, they should already see it coming beforehand and are hopefully more open to keeping you going than shutting you down. If you don’t feel your commercial lender is competent, move on. There are a lot of them that will never help you at all, find one that seems cooperative. A good banker is one of the main keys to staying in business.

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