Income Gross-Up or Eligible Add Backs
As a self-employed borrower, TD allows you to gross-up your 2 year average income from line 150 on your Notice of Assessment by 15% or you may opt to provide 2 years financial statements prepared by a licensed accountant to support a higher income level where eligible add backs exceed the 15% gross-up.  Eligible add backs can include things like business use of home, motor vehicle expenses, and capital cost allowance and must be approved by TD. One thing to note is that if you are incorporated, you are not eligible for the 15% gross up, since you receive a salary from the Corporation. In this scenario you must qualify using your 2 year average from line 150 of your Notice of Assessment.

Self-stated Income/Equity Lending
Using self stated income is exactly what it sounds like. You state your income and we take your word. Now depending on the loan to value, up to and including 75%, there may be other criteria you have to meet including minimum beacon score, proof of 3 year business for self, no previous bankruptcies, no current debt arrears, minimum 3 year credit bureau history etc. Keep in mind that the income you state must be reasonable according to industry standards and like every other credit application, your total debt service ratio and gross debt service ratio should not exceed 40% and 32% respectively. To determine your total debt service ratio, click here. One key point I should note is that non-owner occupied properties are ineligible under this program. To confirm 3 years business for self, TD may ask for things like GST returns, audited financial statements or proof of business account.

Insured stated income program
Applicants under this program are self-employed borrowers who have difficulty providing documentation for their current income level and do not have at least 35% equity. These are often people who have recently begun to work for themselves. On April 9, CMHC made the following changes to the Insured Business for Self program:

• As a self employed borrower, you must be able to demonstrate that you have experience working in the same field for a minimum of 2 years. This can include time spent working as non self-employed in the same field. 
• If you have been self-employed for more than 3 years, you are not eligible under this program and must provide traditional proof of income.
• Commissioned applicants are not eligible for the insured business for self program.
• Purchasers must provide at least 10% down payment and those who wish to refinance will be limited to 85% loan to value.

Under this program, the same criteria mentioned in section 2 of my blog must also be met. To offset the additional risk, the insured Business for Self program comes with higher insurance premiums. Refer to CMHC Insurance premiums for more information.

Remember, no matter what type of mortgage financing you are looking for, it makes sense to speak to me first. I am available outside of normal banking hours, weekends and evenings to suit your schedule.

Sincerely,
Josephine Ng
www.tdmortgage.wordpress.com

• Credit activity over time and how you manage your debt
• Personal Information
• Different types of accounts you have including revolving and installment accounts
• Any outstanding collections

Knowing your credit score and how to improve it can save you thousands over the life of a loan. If you’re looking to purchase a home or car or just prepare for a future event that could require some sort of financing, then you may want to incorporate a few of these tips to maintain and improve your score:

1) Know your number – Credit scores range from 300 to 900. There are many ways to order your credit report, such as by phone or fax. The best way is by internet through a credit reporting agency such as Equifax or TransUnion.

2) Review your report – When you receive your credit score, its important to ensure that the information in the report is correct. If the score is lower than you would like, read it carefully to find which factors are most likely having a negative influence on the socre, and work on improving it.

3) Pay the minimums or more - Make sure that you are making your payments in full and on time. If you can’t afford to pay the entire balance, then at least pay the minimum. Set your accounts up for automatic payment to avoid being late or missing a payment.

4) Pay down your debt – Your score is also dependant on how much you owe. If you’re overextending yourself , a potential lender may look at this unfavourably. Try to find ways to also lower your interest on high interest rate cards. A debt consolidation is an option you may want to consider before applying for any other credit.

5) Don’t go over 50% of your credit limit

6) Apply for credit in moderation

7) Dont be afraid to ask for HELP - There are a few not-for-profit counselling services available for those of us looking for a plan to alleviate debt and improve credit scores. A free consultation with Credit Counseling Services of Canada Inc. or Credit Canada could help you with a specific debt repayment plan and strategies to improve your score and offer you peace of mind.

No matter what type of mortgage financing you are looking for, it makes sense to speak to me first. Thank You!

Sincerely,
Josephine Ng
www.tdmortgage.wordpress.com