FOR BUSINESSES

Commercial Mortgage

We specialize in providing commercial mortgages and private equity real estate investments for diverse projects, including multi-family, retail, office, industrial, hotels, land and construction ventures throughout Canada. Our commercial mortgage broker team comprises experts in developing innovative and customized solutions with timely approvals and exemplary customer service. We offer competitive interest rates from over 40 banks and lenders on a wide range of fixed rate, variable rate and interest-only options for commercial mortgages, ensuring we meet the varying needs of our clients. Our unparalleled level of service and attention to detail ensure transparency, reliability and consistent delivery of value to our customers, making us your ideal partner for commercial mortgages and real estate investments.

A commercial mortgage is commonly used for:

  • Businesses investing in income-producing real estate properties greater than $500,000
  • Financing multi-residential (minimum 7 rental units), industrial, office or retail property
  • Financing properties that are readily marketable and located in an active resale and rental market

Eligibility requirements:

  • Mortgages require a current appraisal (AACI qualified, bank approved appraiser), a passing Environmental report (Phase I ESA), and may require a Building Condition Report
  • Canada Mortgage and Housing Corporation (CMHC) requests, if required, must comply with CMHC guidelines

Key benefits

  • Competitive interest rates, terms and conditions
  • Variable and fixed rate options are available, with the ability to convert from variable to fixed if interest rates fluctuate
  • CMHC insurance is available when required
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Commercial Financing in British Columbia

Commercial real estate mortgages in British Columbia are typically available up to 75% of the appraised value or as high as 85% for multi-family properties under the CMHC insured program. Amortization periods can extend up to 40 years depending on the building age, location, physical condition, lease profile, available debt service and building use. Key variables negotiated for each transaction can include fixed or floating rates, forward start arrangements, interest only or amortizing payment schedules, demand or committed facilities, duration of term, financial covenants and form of recourse.

Understanding the local British Columbia real estate market, its economics and trends, combined with a strong network of commercial lenders across Canada allows our British Columbia commercial lending team to provide our customers with the most competitive financing available for all your commercial real estate needs anywhere in British Columbia.
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How commercial mortgage works

Canada operates as a type of loan secured against the business property, designed to help business owners and investors acquire, refinance, or redevelop real estate. The process begins with a borrower approaching a lender who qualify the borrower’s creditworthiness, working capital, business cash flow, the value of the estate to be mortgaged, and the desired amortization terms.

Key metrics such as the loan-to-value ratio, debt service coverage ratio, and the property’s revenue-generating potential are scrutinized to qualify the loan amount, interest rates, and the amortization period. The interest rates on mortgages may be fixed or variable, with fixed rates providing consistency in monthly payments and variable rates fluctuating with market conditions.

The loan-to-value (LTV) ratio represents the amount of the loan compared to the value of the estate, influencing the risk assessment for lenders.

Borrowers can utilize tools like a commercial mortgage calculator, to estimate monthly amortization payments and the impact of different commercial mortgage rates on their financing costs. Once the loan amount is approved, the estate acts as collateral, ensuring the lender can recoup losses in case of default.
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Types of commercial mortgages

In Canada, a myriad of mortgage types caters to the diverse range of properties and the unique financial needs of business owners and investors.

Hard money loans:

  • Short-term loans with higher interest rates, often used for quick financial needs, and typically based on the value of the estate rather than the borrower’s credit.

CMHC-Insured mortgages:

  • Mortgages insured by the Canada Mortgage and Housing Corporation (CMHC), often providing favorable terms like lower down payments and competitive interest rates.

Conventional commercial mortgages:

  • Traditional loans offered by banks or credit unions for purchasing, refinancing, or renovating properties.

Bridge loans:

  • Short-term loans used to bridge the gap between short-term financial needs and long-term financing solutions.

Blanket mortgages:

  • A mortgage that covers more than one piece of real estate, useful for developers or investors managing multiple properties.

Subprime mortgages:

  • Mortgages offered to homebuyers with poor credit history, but they can also apply to commercial mortgages for borrowers with less-than-perfect credit.

Permanent loans:

  • Long-term financing used to pay off construction loans or other short-term financing solutions.

Fixed-rate commercial mortgages:

  • Mortgages with an interest rate that remains constant throughout the life of the loan.

Construction loans:

  • Short-term loans used to finance the construction or renovation of real estate.

Mezzanine loans:

  • A hybrid of debt and equity financing that gives the lender the right to convert to an equity interest in the company in case of default, after venture capital companies and other senior lenders are paid.

Variable or adjustable-rate commercial mortgages (ARMs):

  • Mortgages with interest rates that can change based on market conditions.
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FAQs

Questions
you may have!

A commercial mortgage is a loan secured by property or commercial real estate, such as an office building, shopping center, industrial warehouse, or apartment complex. The proceeds from a commercial mortgage are typically used to acquire, refinance, or redevelop property.

Residential mortgages are typically for personal residences, while commercial mortgages are for properties used for business purposes. Commercial mortgages usually have high rates of interest, more stringent eligibility criteria, and shorter amortization periods compared to residential mortgages.

Cash flow demonstrates your ability to cover the mortgage payments. Lenders will assess your business’s cash flow to ensure that you have sufficient revenue to service the debt.

The loan-to-value (LTV) ratio is calculated by dividing the mortgage amount by the appraised value of the commercial property. It’s a measure used by Lenders to assess the risk associated with the loan.

Eligibility is more complex than for a residential mortgage, as the company’s financial position must be analyzed thoroughly. Most other business Lenders will require the following:


Business history lasting at least two years; proof of profitability and revenues, including a business plan and financial projections showing a minimum debt-service coverage ratio of 1.25; and a minimum credit score for both the business and the owner(s) of the business and the small business loans themselves.


In addition to credit, the requirements for a down payment are generally higher than with a residential mortgage, ranging from 20% to 50%. The type of small business loans that you are in also affects what kind of mortgage you can get.


If your company doesn’t meet some of these criteria, don’t lose heart: there are alternative creditors designed to offer loans to help newer businesses, those with low risk or poor credit scores, and businesses in unusual situations. You will probably still have some options to choose from!

The interest rate on most commercial mortgages is affected by a few different factors relating to the financial position of the company doing the borrowing:


Its debt-service coverage ratio, its credit score, the size of its down payment, and other pertinent financial data.


The variability in the type and size of the down payment for businesses taking on higher rates of commercial mortgages, along with differing amortization schedules, means that rates of interest fluctuate quite a lot – generally anywhere from 4% to 10%.


Both fixed rate and variable rate commercial mortgages are available.

Mortgage amounts vary, both by lender and according to each borrower’s situation, including the desired amortization schedule.

Many of the larger, traditional lenders (like banks) have their own rates and minimum borrowing amounts.

Usually around $500,000, although some have their own rates with a lower limit of $1 million.

Maximum amounts can be as high as $40 million.

It is certainly possible with some Lenders to use a standard for an agricultural property purchase, but you do have other purchase options available.


Both farm mortgages and acreage mortgages are widely available throughout Canada, and are designed to furnish the country’s many farmers with affordable purchase alternatives, mortgage terms, and amortization schedules that suit their particular needs better than a standard.

The commercial mortgage lending scene in Canada is home to several reputable lenders known for their robust mortgage offerings and customer-centric services. Among the top lenders are major banks such as RBC Royal Bank, TD Bank, and Bank of Montreal.

Credit unions also constitute a significant portion of the lending landscape, with institutions like Meridian Credit Union and Alterna Savings being notable players.

Moreover, private Borrowers and mortgage investment corporations provide alternative financing solutions, often catering to borrowers with unique needs or those unable to secure financing from traditional borrowers.

Each of these borrowers brings a distinct approach to commercial mortgage lending, creating a dynamic and accessible commercial mortgage sector with varied amortization options in Canada.