SELF-EMPLOYED BUT NEED A HOME EQUITY LOAN

If you’re self-employed, you may find it harder to get a home equity loan than if you were employed
by someone else. The reason for this is that when you’re self-employed, the only income that
lenders can use to assess your ability to repay the loan is your personal income. As someone self-
employed, this can make it more difficult to prove that you can afford the loan repayments;
especially if your income fluctuates from month to month. One proven way out of this is using a
home equity loan.

What is a home equity loan?
If you don’t know what home equity loans are, then we need to address that for better context and
understanding. A home equity loan is a type of secured loan, which means that the loan is backed by
collateral. In this case, the collateral is the borrower’s home equity, that is, your home equity. Home
equity loans are frequently used to fund large expenses like home repairs, medical bills, or college
education.
Because home equity loans are secured by your home equity, they typically have lower interest rates
than unsecured loans. Additionally, home equity loans may offer tax advantages depending on your
financial situation.
And, if you’re wondering how to get a home equity loan despite being self-employed, here are a few
tips that may help you qualify and improve your chances:

1. Show evidence of income. When you’re self-employed, lenders will want to see evidence of
   your income. This could include tax returns, bank statements, and financial statements from
   your business.
2. Have a good credit score. A strong credit score will give lenders confidence that you’re capable
   of repaying a loan. If your credit score is not as strong as you’d like it to be, there are steps you
   can take to improve it before applying for a loan.
3. Keep your debt-to-income ratio low. Your debt-to-income ratio is the amount of debt you have
   compared to your income. Lenders prefer to see a lower debt-to-income ratio because it means
   you have more disposable income each month to put towards repayment of the loan.
4. Have a large down payment saved up. A larger down payment will decrease the size of the loan
   you need to take out, which in turn makes it easier to repay. It also shows lenders that you’re
   serious about buying a home and have the ability to save up money for a down payment.
5. Try to find a lender who is willing to consider alternative forms of income, such as assets or
   investments.
6. Shop around and compare offers from different lenders before deciding on a loan. Be sure to
   read the fine print and understand all of the terms and conditions before signing anything.
    
   Bottom line
   Now that we have established that as a self-employed Canadian, you can get home equity loans, it is
   also important to research how to get the lowest rates on home equity loans in Brampton. While this can help you bring down the amount to pay back, it will also prevent you from getting further into debt.