Not all
mortgages are about building a home.
When most of us mortgages, we think of borrowing money to purchase a home. But there is a whole other world of financing that might not be as far removed from your reality as you might think: commercial mortgages.
For most Canadians, the idea of a commercial mortgage seems like a far-off concept reserved for high-profile investors and real estate tycoons. And while these larger, more complex mortgages do serve those niches, they are also an important tool for financing a diverse selection of properties - and we can help!
Who might use a
commercial mortgage?
Small business owners looking to grow into an office or retail space of their own
Investors looking to diversify their portfolio with larger-scale multi-family properties
Entrepreneurs needing to build out a leased space with specialized renovations not covered by a landlord
Aspiring full-time landlords looking to purchase pure residential properties and create a business out of managing them
And so many more!
Commercial mortgages 101.
As a prospective borrower, understanding the nuances of commercial mortgages and the Canadian lending landscape is essential to securing the best possible and unlocking the full potential of your commercial property investments - and we can help! In the meantime, here are a few key things to remember about how commercial mortgages differ from residential in Canada.
Properties: This goes without saying, but where the purpose of a residential mortgage is to purchase or refinance personal homes, a commercial mortgage is used to finance commercial properties, such as offices, retail spaces, or apartment buildings.
Qualification: Residential mortgages leverage personal credit history, income, and debt ratios to qualify a borrower while commercial mortgages focus on the property's income-generating potential and the borrower's business stability.
Down Payment: Commercial mortgages generally require a larger down payment of between 25 and 35%, whereas residential mortgages can have down payments as low as 5%.
Interest Rates: Commercial mortgages generally have higher interest rates than residential mortgages. This is because the risk assumed by a lender for a commercial property is greater than that assumed with a residential property.
Term: Commercial mortgage terms are usually shorter (5-20 years) compared to residential mortgage terms (up to 25-30 years). However, there are lenders who do offer longer terms that can be leveraged to keep as much cash flow in your business as possible.
Flexibility: Commercial mortgages often offer more flexible financing structures, allowing borrowers to customize the loan terms based on their specific needs and risk profiles.
Considering a commercial mortgage? Our team can help.
Whether you are a small business owner looking to expand your reach on the ground or an investor looking to diversify your portfolio, we have your back. Reach out today or complete the quick form below to start the process of financing your next big thing.
We are
Happiness Creators
It’s hard to describe just what happens in that moment that you get approved for your home. Life changing would be one word that comes to mind.
Not only do we want you to become approved for a mortgage, we want you to be confident that you made a decision that you’ll feel good about for your entire time owning that home.
For some of our clients, who may have been declined previously, we work with them to put together a plan that will get them through.
Our track record of making our clients mortgage dreams come true is something we are proud of. It’s why we do what we do.
