Business-for-self segment too big to ignore

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“The BFS segment in Canada is growing and represents about 18% of the workforce,” says Tom Hickey, VP Operations (Adjudication) for B2B Bank. “We see an opportunity to adapt to the changes in the workforce Canada is experiencing.”

While the opportunities are there for the taking, the paperwork needed for a loan application can be intimidating; which makes it incumbent on the broker to be proactive and ensure that all of the Ts are crossed and the I’s dotted when it comes to credit and .

“A lot of the subtrades that own their own businesses – like house painters – are getting paid in cash,” Tylor Volk, a lead planner with Mortgage Architects, told MBN. “It is these clients who need to be encouraged to show their invoices and deposit their pay, instead of just taking it and spending it.”

Lenders like B2B Bank have products that are 65% loan-to-value – but there is an expectation of income reasonability as well, which demands the broker be thorough with the client.

“A lot of people think they can just state whatever income they want,” says Volk. “What we’re seeing now is that we are having to demonstrate and prove income in an alternative and reasonable manner.”
  • Gerald D on 2015-09-03 4:47:28 PM

    The Lenders here are not just concerned about the coverage of the loan, but of potential tax liability. If a borrower lives in a 1.0MM home, but only shows income of 35k to the government, and 150k to the lender. The lender will realize that tax liabilities on the 115k difference are likely going to come home to roost during the loan. Needless to say, that liability is going to take priority over the mortgage liability.

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