Commercial Mortgages
A commercial mortgage is designed for businesses and investors who wish to purchase or refinance income producing, commercial properties. With competitive interest rates, we are committed to finding solutions meeting the individual needs of each customer. Borrowers should also be aware of the fees in the commercial mortgage market; typically there will be a lender fee of 1% and a more expensive commercial valuation than would be applicable to a similarly valued residential property. Given the nature of the complexity of titles and covenants on many commercial properties, a higher legal cost will be incurred, not only through the borrower's own lawyer, but in many instances the lender uses their lawyer in parallel to validate the quality of the work, this cost also needs to be factored in.
Types of Financing
- shopping centers
- industrial buildings
- office buildings
- golf courses
- resorts or hotels
- parking garages
- Car washes.
How do I get a commercial mortgage? Well, you really go through the same process as you would to get any other type of mortgage. Most lenders are a bit fussier about lending commercial money. They'll want more details about the venture, including whether the building is fully occupied or not, what kind of business you are engaging in, and any other kinds of information (up to and including business plans and business records, if applicable) which will prove the viability of your business venture. Don't despair. Just like there are for home mortgages, you'll have more than one type of lender. There are lots of "A" paper lenders, "B" paper lenders and easy "C" paper lenders. This means that if one lender turns you down, there may be another lender who is willing to take a bit more risk on you. As always, if you increase the risk to the lender, you can expect to pay more interest as a result. Even if you only qualify for a "C" lender, you may be able to get a better interest rate from one C lender versus another.
If you are having problems finding a suitable lender, consider a mortgage specialist. A broker can work with you to ensure you have the right information for a lender, and then go out and find a lender for you.
Securing the right commercial mortgage:
This has everything to do with matching your building and property type and related location to a relevant lender. I emphasis relevant lender in that while there are many lenders that will show interest in financing your property, there will likely only be a few that can actually put a mortgage in place.
Why?
There are several reasons:
- Commercial mortgage lenders can be very specific about the type of properties, locations, and industries they will consider. Even if you fit with the criteria of a lender, there still is no guarantee that they will be able to help you due to the fact that their portfolio and funding requirements are always changing. As an example, if a lender has too high a concentration of assets in one category, industry, or even geography, they may decline a perfectly solid applications that they themselves would have approved and funded only months earlier. As a result, commercial property funding can very much be a moving target and requires knowledge of whose lending and who’s not at any given point of time for any type of commercial application.
- Lenders can have significantly different terms and conditions that can have a direct impact on any potential deal or even your interest in what they have to offer. If you're seeking lower cost financing, then you've got to be prepared to meet more terms and conditions to get financing and hopefully you'll have the necessary time lines to cover everything off. But time lines don't mean much if you're not working with a relevant lender in the first place. As an example, say you have 4 months to get financing in place, but after 3 months, you still haven't gotten a commitment from a lender and when you do, you still may need a month or more to meet the mortgage requirements. If you're not working with the most relevant lenders right from the start, you risk running out of time and killing a deal or experiencing some form of cash flow or business interruption issues.
Commercial mortgages are available to clients who are searching for financing to cover costs for purchases of commercial buildings, fuel stations, multi-family units and apartment buildings. Commercial lenders have different criteria for each situation. Take advantage of our resources and expertise when it comes to your commercial mortgage. We are always available to discuss your situation and needs for a commercial mortgage.
Get the Best Commercial Rates in Canada
Whatever the structure you are building, Northland/Dominion Lending is here to ensure the best construction financing is attained to fund your purpose. Construction mortgages are available for the building of:
- Residential homes
- Condominiums and townhouses
- Apartment buildings
- Commercial centres
- Recreation sites
- Hotels and motels
- Factory plants and industrial buildings
Advantages to Construction Financing through Northland/Dominion Lending
- Utilize the commercial expertise of the top mortgage purveyor in Canada, with nearly 10 years financing experience
- Secure a flexible product that enables the payment options you need to maintain a manageable cash flow throughout the various phases of building
- Access construction mortgage products nationwide - city or rural
- Interest only, open mortgage, with ability to lock in to the top fixed-rate mortgage available at the time construction completes
Get the Best Commercial Rates in Canada
Every request for commercial mortgaging is different and specific. Northland/Dominion Lending will ensure your requests and goals are met with the right product, the best terms and the lowest rates available in Canada. Utilize the decade we have had in the Canadian mortgage industry, providing the top mortgage products regardless of the size or location of your venture, countrywide. We can provide the right mortgage products for:
- Apartment buildings
- Office towers
- Low-rise, mid-rise or high-rise commercial, industrial or institutional edifices
- Gas stations
- Condominium complexes
- Retail malls
- Storage buildings
What you will Need to Attain Your Commercial Mortgage:
- Professional appraisal of the property
- Phase I Environmental report
- Mechanical Report (if applicable)
- Net worth statement, required of all borrowers
- Credit history, required of all borrowers
- Company financial statements
- Copy of sales agreement (if applicable)
Refinancing Could Save You Money
There are several reasons as to why you may be considering the refinance of your commercial mortgage. Before you take that step, consult a Northland Mortgage specialist to discuss all of your options. Refinancing a mortgage product will often incur a penalty fee, but if you refinance into a better mortgage product, with more flexible terms and a lower rate, the refinance will still be of large benefit.
When to Consider Refinancing
A Northland/Dominion Lending mortgage representative will be happy to assist you in determining when and how you should go about the refinance of your commercial mortgage. Here are some common determinates:
- Current rates offered are substantially lower than the rates you are paying on your current mortgage product
- The terms of your current mortgage contract are restrictive; a more flexible product would better suit your venture
- You would like to utilize some of the equity you have built on your property towards other endeavours; to expand your current operations or to purchase machinery, make repairs or put toward other beneficial uses
- You wish to consolidate other commercial loans or high interest debts into the refinance, allowing for one, easy payment at a lower interest rate
In many cases, before a commercial mortgage refinance can get underway, the bank or lender from which your mortgage was borrowed will request information detailing why the refinance has been requested. They request this information to determine the financial viability of the request. In addition, a new, current appraisal may be required to accurately gauge the present value of the mortgaged property, and thus its accurate refinance value.
Northland will aid you in every step this process takes. Our commercial mortgage specialists will utilize their years of expertise in ensuring your commercial mortgage refinance is optimally transacted to best benefit you and your business.
Commercial Mortgage Renewal
Mortgage Renewal Date Fast Approaching?
If the renewal date for your commercial mortgage product is on the horizon, don't hesitate in taking this time to secure for yourself, and your company, a better commercial mortgage product. Northland Mortgage has access to a vast network of commercial lenders, and will scout out among their products the one that best suits your commercial mortgage needs.
Plan Your Mortgage Renewal Ahead of Time
The process of switching lenders can often take 90 days to complete smoothly. Give yourself ample time to find the optimal product for your renewal. Keep in mind that by failing to secure the best rates on your commercial mortgage renewal, you could be paying thousands of extra dollars toward interest payments over the course of your next multi-year term. Start your mortgage renewal process no later than four to six months before your current term is due to expire. The notice of expiration from your current commercial mortgage provider may come within this timeframe, or even closer to the renewal date, so be sure to stay cognizant of when you are halfway through the last year of your term.
Industrial Property Mortgage
Mortgage Loans for Industrial Projects
Northland Group has access to wide array of competitive industrial property financing products designed to accommodate nearly any industrial commercial structure, including:
- Factory
- Warehouse
- Storage unit
- Industrial space
- Workshop
- Manufacturing site
- Plant
What You Will Need to Attain Industrial Property Financing
Lenders will require several items in accepting your request for an industrial property loan. Northland Mortgage will ensure this process is straightforward and prompt. These items will usually include:
- Property location and specifications
- Building appraisal and property survey
- Relevant industrial experience
- Credit history
- For an existing business, the previous two years accounts
- Environmental reports
- Legal clearances
- Proof of tenants or tenant leases
Private Financing in Canada
You do not have to rule out the purchase of a commercial property because traditional banks and lenders can't, or won't, provide the funding you need in the time you need it by. Private commercial financers are available to fill in the gaps when you need financing within a short period of time, or for a venture traditional lenders cannot fulfill to match you needs. Private lenders will charge a higher rate and possible fees in lieu of the quick and short-term access to large funds they can afford.
Points to Consider
- Funds are granted with less criteria than traditional products are
- Expedited access to loan amount
- Interest rates can be greater than prime plus eight per cent
- Fees can range between one to five per cent of the total loan amount
- Tend to be geared to short-terms (less than 24 months), usually 90 days
- Can be used during interim periods or while waiting for longer term products to be approved
Whatever the structure you are building, Northland/Dominion Lending is here to ensure the best construction financing is attained to fund your purpose. Construction mortgages are available for the building of:
- Residential homes
- Condominiums and townhouses
- Apartment buildings
- Commercial centres
- Recreation sites
- Hotels and motels
- Factory plants and industrial buildings
Advantages to Construction Financing through Northland Mortgage
There are numerous reasons why securing your construction mortgage through Northland will be advantageous to your building venture:
- Utilize the commercial expertise of the top mortgage purveyor in Canada, with nearly 10 years financing experience
- Secure a flexible product that enables the payment options you need to maintain a manageable cash flow throughout the various phases of building
- Access construction mortgage products nationwide - city or rural
- Interest only, open mortgage, with ability to lock in to the top fixed-rate mortgage available at the time construction completes
Rental Property Financing
Attaining your rental property mortgage through Northland will ensure that you obtain the optimal financing option for your multi-unit rental property purchase. Rental property mortgages are available for the acquisition of newly built or used properties, and to refinance at competitive rates so that you may:
- Free equity built in a property to put into investments or use personally
- Expand your real estate portfolio and use funds to make a down payment on an additional property purchase
- Renovate and increase the value of your current property
- Add units to your current multi-family rental property to increase income revenue over time
A Northland commercial mortgage specialist will ensure that the process of attaining your rental property mortgage is conducted clearly, efficiently and promptly. If this is your first rental property investment, do not hesitate to address any questions you may have. We can put you into contact with a reputable property appraiser or inspector in your area and offer you guidance every step of your financing path.
Consider the following items in your application process:
- Properties need to generate approximately $1.30 of income for every $1.00 of debt to be viable
- The borrower's net worth must be equivalent to at least 25 per cent of the loan amount
- Revenue earned from the rental property must cover the operating expenses of the building and mortgage payments
- Income generated from the property must be incurred from legal suites meeting permissible qualifications for the locale
- Mortgage insurance will usually be required if financing is provided toward 65 per cent, or more, of the property value.
Land Development Financing in Canada
Northland can purvey for you the land development financing you need to service your land parcel or property with utilities and infrastructure. Pave roads, install curbs, and ready your property to sell, or to begin the construction of your future business.
Land Development Financing May be Used to Ready Property for:
- Residential development projects
- Recreational centres
- Golf courses
- Industrial or factory sites
- Parking lots or multi-story parking stations
- Retail development and malls
- Storage sites
What you will Need to Attain Your Land Development Financing
In order to qualify for your land development mortgage, you, the developer or property owner, will be requested to aptly demonstrate the potential and saleability of your land once it is developed.
Office Building Mortgages
Commercial Financing in Canada
The purchase of an office tower or professional building is a large endeavour that can make for a great investment opportunity and a continual, growing income source. Office, professional and medical centres generally only appreciate in value, and can provide sound, reliable revenue. There are, however, several items you, or your business, should consider to ensure the building in which you are applying to secure a mortgage on to purchase is a viable investment.
Down payment: Office building mortgages generally call for a 30 per cent down payment. Consider how you will provide this. Common options include refinancing another property owned or seeking investors.
Revenue: Properties need to generate approximately $1.30 of income for every $1.00 of debt they accumulate to be viable. Examine the building's projected earnings and past records thoroughly.
Repairs and Building Maintenance: Ensure the building is appraised and inspected by reputable professionals. Incorporate any repairs or renovations that need to be completed into your budget, as well as long-term property and parking lot maintenance, landscaping, insurance and property tax.
Vacancy: Finding long-term tenants to lease professional space can be more difficult than finding residential renters. Ensure the current occupants of your prospective building purchase can sustain the building's income, and determine if the building you intend to purchase has more vacant units than other buildings in the area, or if the entire area has a higher than average rate of vacancy than other sections of the city or town site in which it's located.
Administration: Do you or your company possess the faculty to take on the added tasks of administering units, tending to tenant inquiries and property upkeeps, or will you need to hire additional staff? Another item to consider in your budget.
Applying for Office Building Financing
Northland will be your guide in attaining the right mortgage for your office or professional building purchase. A commercial mortgage representative will walk with you, step by step, through the process and ensure that the following are provided as the specific situation deems necessary:
- Present rent roll - Includes unit information, lease abstracts and tenant descriptions.
- Income and expense statement - Includes annual property tax, insurance, utilities, water, management plan, maintenance and repairs.
- Detailed physical description, survey and appraisal of the property.
- Contract of sale, if property is an acquisition.
- Current financing summary, if property is being purchased with a refinance of another mortgage.
- Details on any intended or present management company.
- Present financial statement.
Retail and Strip Centre Mortgages
Rental Property Financing
Let Northland provide for you the retail or strip centre financing you desire, on your terms. The Canadian retail and strip centre market is diverse and competitive. Northland will work with you to ensure that you attain the best rate and term available for your centre.
Retail and Strip Centre Financing Need to Knows
As is the case for attaining nearly any commercial financing product, lenders will have requirements they are seeking in providing you the financing for your retail or strip mall venture. Utilizing Northland Mortgage specialists ensures you guidance through the application procedure so that you may attain the retail financing you need. Here are some of the items you will need to know regarding your strip centre or retail mortgage:
- Financing can be provided at 65 -75 per cent loan to value
- Properties will need to generate approximately $1.20 of income for every $1.00 of debt they accumulate in order to be deemed viable
- Lenders will review leases and will complete their own assessment of the property's revenue
- Lenders will be looking for a strong, reliable and diverse tenant base that matches the terms of the mortgage
- Location, condition and detailed access information (roads, parking, loading zones) regarding the property will need to be provided
- Credit history will be verified
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