With OFSI’s new B20 rule changes many self employed are caught flatfooted. BFS borrowers make up 30 % of the mortgage market. The biggest focus of the rule change is on the borrowers identification and and verification of the borrowers income. Prior to the rule changes, BFS borrowers could easily apply for mortgages stating their income however now they will have to disclose more with T1 Generals, Notice of Assessments and Bank statements. Self employed borrowers will now have to opt to draw more income personally and pay more personal income tax this year. The goal is to bump up the borrowers personal income to a level that will allow the borrower to qualify for the level they are looking for. Many self employed people often draw their income as a dividend but this is not the best strategy anymore, it’s good for taxes but not good for mortgages.. As always the most important is keeping impeccable paperwork and understanding what your goal is now and in the future and what you need to claim personally for income to make you qualify and start planning for that today and not when you are ready to buy.
OFSI B20 rule changes and how they effect self employed