Obtaining a mortgage as a self-employed borrower

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With mortgage rates continuing to stay near ultra-low levels, it's no surprise that many Canadians are clamoring to invest in a home purchase or refinance their current home loan. However, the process can be slightly more difficult for one of Canada's growing demographics: The self-employed.

The latest statistics from Industry Canada show that the country has 2.67 million self-employed individuals, which represent nearly 15.4 percent of all the employed workers in the country's economy. In fact, the number of self-employed Canadians has risen steadily over the last 10 years, especially amongst women.

"Over the past decade, the number of self-employed workers increased by 17 percent, while the growth rate of the overall labour force was 15 percent," reads an excerpt from Industry Canada's official website. "Slightly more than one-third of self-employed workers were female – the share of female self-employment rose steadily from 1976 to 1998, from 26 percent to 36 percent, and has remained at around 35 percent since 1999." Continue reading

Types of Commercial Mortgages

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Most Canadians are familiar with residential mortgages. After all, homeownership is something most people aspire to, so the ins and outs of home loans and mortgage rates tend to reveal themselves to consumers as they take their first steps toward purchasing a property. However, unless an individual is a business owner or investor, they might not understand the intricacies of commercial mortgages.

What is a commercial mortgage?
Put simply, a commercial mortgage is a loan for real estate that is used for business. Whereas a person's house or condominium may require a residential mortgage, commercial mortgages are used for properties that are used for office space, retail, manufacturing and other non-residential services. Continue reading

Understanding Commercial Mortgages

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While Canadian mortgages have been a hot topic for quite some time, the spotlight is usually trained on the residential variety. After all, more people are buying homes for their families than purchasing buildings for businesses. But the commercial mortgage market is just as important for the economy as residential housing, if not more so. The commercial mortgage market often acts as a barometer for more than just real estate. More commercial mortgages tends to mean more jobs, which usually means higher household incomes and a healthier economy. 

While the ins and outs of commercial mortgages are similar to residential mortgages, there are some key differences as well.

Qualifying
When it comes to residential mortgages, qualifying for a loan falls squarely on the borrower. Income and credit history are taken into account, and if a borrower doesn’t meet a lender’s standards, the loan is denied. Commercial mortgages, on the other hand, are more about the property itself and the cash flow the property will be earning. Lenders take into account the net operating income of a property, meaning how much money it will be bringing in after payments and depreciation. They also look at the debt service coverage of a property, comparing income against the costs of principal and interest payments. Continue reading

Commercial real estate properties and activity fuel Canadian economy

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Everyone who knows somebody contributing to the commercial mortgage sector – whether he or she is a small business owner who buys office space or part of a larger company that employs commercial real estate professionals to find that perfect available space – needs to thank that person for contributing to the Canadian economy.

Yep, it's true. The latest research from the Real Property Association of Canada and the NAIOP Research Foundation discovered that the commercial real estate sector contributed $63.3 billion to Canadian economic activity last year alone, and the sector is reportedly twice the size of the economies of Newfoundland and Labrador.

But where does all of this economic support come from? Surely it's acknowledged and appreciated, as various rating services have commended Canada on its strong, stable economy. However, the commercial real estate sector provides an abundance of jobs – 340,000 of them, to be exact. Most of these jobs are high-paying professional jobs, according to the report, and equal to the total employment force of the entire Canadian agriculture industry. All of the income from those jobs combined total more than $18.1 billion, roughly twice the income of the agriculture, forestry and fishing industries combined. Continue reading

Small business confidence drops, affected by mortgages and debt

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Although 20 percent of Canadian small and medium-sized business owners reported plans to hire within the next three to four months – a higher number than average – small business confidence levels have fallen to a three-year low. The Canadian Federation of Independent Business (CFIB) reported that this may be attributed to mortgage news, unprecedentedly low mortgage rates and high debt causing difficult economic conditions.

“In addition to the continuing difficulties in Europe and the sluggish recovery in the U.S., elevated household debt levels in Canada will keep personal spending growth in check in the near to medium term, limiting economic prospects for Canada," said Jacques Marcil of TD Economics.

The most pessimistic business owners – specifically retailers – could be found in Prince Edward Island and Nova Scotia. Small and medium-sized businesses in Saskatchewan were the most confident, with the manufacturing, natural resources and financial industry confidence levels remaining higher than average. Continue reading

Many Canadian businesses expect less sales volume this year

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Several financial experts predict Canada's economy will experience limited growth this year, and many businesses appear to agree.

According to the Bank of Canada's quarterly Business Outlook survey, 41 percent of Canadian businesses expect less sales volume during the next 12 months, while 37 percent project a sales increase. The survey demonstrates a shift in confidence among companies, as the results mark the first instance since early 2009 that more businesses were more pessimistic about their immediate future than optimistic.

"Responses to the winter survey suggest that the global economic outlook and concerns about demand continue to weigh on firms’ expectations for business activity," the report said. Continue reading

Canadian business executives less optimistic about future sales

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The Bank of Canada released its third quarter Business Outlook Survey on Monday, and due to increased global economic uncertainty which has driven low posted rates, Canadian business executives are feeling less optimistic regarding future sales.

According to the survey, 39 percent of companies believe sales will grow over the next year, a decrease from 49 percent in the previous quarterly survey. Also, 33 percent of respondents predict slower sales in the following 12 months, creating a 6 percent gap between optimistic and pessimistic companies, the smallest difference since 2009. Continue reading

Survey: Confidence among Canadian small businesses falls during August

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According to a recent survey conducted by the Canadian Federation of Independent Business, confidence among the country's small businesses plummeted during August.

The CFIB's business barometer, based on a scale between one to 100, fell to 61.7 in August after reaching 68.3 in July. For perspective, August's reading was the lowest on record since July 2009, which marked the beginning of Canada's recovery from its three-quarter recession. Continue reading

Corporate profits expected to decline during second half

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According to a recent report conducted by the Conference Board of Canada, the profits of Canadian corporate businesses are expected to decline during the second half of the year.

The report refers to the soft U.S. economy as a major factor in this forecasted trend, as exporters and consumer confidence will weaken.

The CBC relies on different indicators to compile its report. Its leading indicator for profitability, which tracks 49 industries nationwide, contracted recently – the first time it has done so in a year – as it fell 0.1 percent after being flat the previous two months. Continue reading

Commercial real estate market improving in Montreal

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During the second quarter of 2011, the industrial real estate market in Montreal experienced significant gains, which is important, as the sector had been one of the hardest hit during the recent recession.

A report from CB Richard Ellis revealed that Montreal's market represented more than half of the country's positive net absorption of industrial space during the year's second quarter. In all, 6 million square feet was sold through commercial mortgages or leased – 3.7 million of which were in Montreal.

"We dug ourselves out of a hole," said Brett Miller, executive vice president and regional managing director for CBRE in Eastern Canada. "We were surprised by the strength of the absorption. It surpassed our expectations."
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