September 19, 2008
Proving income, Rental, Small Business
No Comments
Over the past few months I have been getting a number of questions from people who are considering becoming landlords. One question that is asked pretty regularly is, “How much should I rent my house/condo for?”
My answer is always, “This is not my area of expertise but many people go to a great local website for Calgary and Edmonton called RentFaster.ca.”
It won’t tell you how much you can rent your place for but it can serve as a good way to find out how much comparable properties are renting for.
Check it out if you are considering getting a revenue property.
All the best.
Jason
September 9, 2008
Employed Persons, Proving income
No Comments
Income Verification
When getting financing from a lender the easiest way to smooth the entire process is to get all required paperwork to me as soon as you can. If possible even before you submit anything to the lender.
One of the typical lender conditions we need to satisfy is “Income Verification”.
For employeed people this typically means a recent pay stub and a job letter .
The paystub is easy to satisfy. Simply send it to me and usually this condition is met.
The job letter is also easy but brings one other person/department into the process. You need to request a job letter from your boss or your employer’s HR department. This job letter must show your job title, your start date and either an annual salary or an hourly salary with the number of hours you work per week. It is also best if it is on your employer’s letterhead.
Most HR departments can put this information together for you in a business day or two.
I suggest to all my customers to get this data as soon as they can. By getting easy paperwork together at the beginning of the process everything will go significantly smoother.
If you have any further questions about this or any other topic please contact me.
June 27, 2008
Proving income, Small Business
No Comments
As has been mentioned previously in this blog, I am a huge proponent of small business owners. They don’t always get covered in the press but I believe they are the drivers of our strong western economy. It is this deep respect that drives me to learn how to help these people better.
Contrary to many mortgage myths small business owners can get a mortgage for their home and/or revenue properties. For the most part they have to meet all the same criteria their employed counterparts would have to meet with a key exception - proving income. Employees of companies simply get a letter from their HR department and a recent pay stub to show what their yearly wage is. Small business owners don’t generally have pay stubs and no lender would accept a letter for the small business owner that was created and signed by the small business owner. So we find other ways to prove your income.
One of the comments I typically hear from small business owners is, “Why do they ask for so much paperwork?” The reason why is to get third party corroboration from a few sources to ensure the person is active in a business that makes money.
There are two different ways to do this depending if you are a sole proprietor or a shareholder in an incorporated company.
Sole proprietor
Sole proprietors report to the government their business revenue within their personal tax submission (T1 General) every year. So when they need a mortgage they often need to ensure that they have filed their taxes for the previous two years (including the statement of business activities) and paid all their taxes owning. A copy of the T1 Generals submitted to CCRA will be sufficient to satisfy the lenders proof of income criteria in most cases. If taxes are shown to be owed then we need a receipt that shows these have been paid.
Shareholder of an incorporated company
If a person is at least a 50% shareholder in a corporation then the lender will need to see the following:
- The last two years audited financial statements,
- The last two years Notice of Assessments – to confirm that no taxes are owed to the government. If taxes are shown to be owed then a receipt is needed that shows these have been paid.
Both sole proprietors and shareholders in an incorporated company may also need to show one of the following:
- The company’s business license,
- The company’s articles of incorporation.
The above noted documentation will be required and in some cases further documents may be needed as well. Please contact me directly to determine what specific documents you will need.
As I mentioned earlier I respect small business owners and want to make the process for them as simple as possible. This is why I educate my customers so they know what to expect.