Have you wondered why lenders are asking your business-for-self borrowers for GST and Source Deduction (payroll) information? After all, if the income and value for the property can be established, why ask those questions?
Simply put, amounts that a business owner owes the government for GST and Source Deductions can rank ahead of a mortgage. In other words, even though a lender may be registered on title in 1st priority, they may in fact only have a 2nd financial charge on the property. What makes things even more difficult is that there is no need for a formal process, documentation or registration required for CRA to assert this priority. It just happens automatically by operation of law.
So, enough legalese; how do we deal with this situation? For business-for-self borrowers we will ask for confirmation that the borrower is registered for GST and we’ll want evidence that they’re remitting regularly. The same goes for Source Deductions. It’s not a perfect system and there is still risk to a lender even with our due diligence. However Kokanee Mortgage is committed to supporting business-for-self borrowers and finding ways to satisfy the requirements for GST and Source Deductions.
If you’re working with self-employed borrowers, the underwriting team at Kokanee Mortgage are always ready to help find simplified solutions to complex challenges.