How do I apply for commercial mortgages in Canada?
First, you should determine the purpose of the mortgage, such as purchasing property, refinancing existing debt, or funding property improvements. Calculate the amount of financing you need and the type of property you are interested in (e.g., office space, retail, industrial).
Gather information about the property, including appraisal reports, current lease agreements, and any existing mortgages or liens.
Research the lenders and complete a mortgage application form, providing all necessary documentation. The lender will review your financial situation, creditworthiness, and the property details to provide a pre-approval letter or indicate how much you can borrow.
Provide recent financial statements, including balance sheets, income statements, and cash flow statements. Include business tax returns for the past 2-3 years. Prepare a detailed business plan outlining how the property will be used and its impact on your business.
Provide additional documentation as required by the lender, including detailed financial projections and a business plan if not previously submitted. The lender will typically require an appraisal of the property to determine its value and ensure it meets their lending criteria.
The lender will conduct a thorough underwriting process to assess the risk associated with the loan. Negotiate the terms if possible to obtain the best rate and conditions for your business.
Once approved, sign the mortgage agreement and any other required documents. Сomplete any legal work related to the property transfer and mortgage registration. This may involve working with a lawyer or notary.
What are the types of business real estate loans in Canada?
Business real estate loans encompass various types of financing specifically designed for acquiring, developing, or refinancing commercial properties. Here’s a breakdown of the main types:
- Commercial mortgages - used to purchase or refinance commercial properties such as office buildings, retail spaces, and industrial properties.
- Construction loans - used to finance the construction of new commercial properties or major renovations to existing properties.
- Bridge loans - provides short-term financing to bridge the gap between the acquisition of a property and the securing of long-term financing or sale of another property.
- Term loans - used for the acquisition or improvement of commercial real estate, usually with a fixed repayment schedule.
- Equity financing - raising capital through the sale of ownership shares in the property or business to investors.
- Mezzanine financing - provides additional financing on top of senior debt, often used in conjunction with a commercial mortgage.
- Real estate investment trust (REIT) financing - investment through a REIT, which can acquire and manage commercial properties on behalf of investors.
- Land Loans - financing for the purchase of undeveloped land for future commercial development.
Business loan calculations for 3 years (example)
| Amount, $ | Rate, % | Accrued %, $ |
| 500,000 | 6.50% | 50,104 |
| 500,000 | 15.50% | 119,479 |
| 500,000 | 25.50% | 196,563 |
| 1,000,000 | 7.00% | 107,917 |
| 1,000,000 | 16.00% | 246,667 |
| 1,000,000 | 26.00% | 400,833 |
| 2,500,000 | 7.50% | 289,063 |
| 2,500,000 | 16.50% | 635,938 |
| 2,500,000 | 26.50% | 1,021,354 |
| 5,000,000 | 8.00% | 616,667 |
| 5,000,000 | 17.00% | 1,310,417 |
| 5,000,000 | 27.00% | 2,081,250 |
How can commercial mortgage broker work help you?
In Canada, commercial mortgage brokers can be a valuable resource when seeking financing for commercial properties. Commercial mortgage brokers have specialized knowledge of the commercial real estate market, including current trends, lending practices, and financing options.
Brokers assess your specific financing needs and match them with the most suitable loan products available. This involves understanding your business goals, property type, and financial situation. Brokers help you gather and prepare the necessary documentation for the mortgage application, including financial statements, property appraisals, and business plans.
Brokers negotiate on your behalf with lenders to secure favorable terms and rates. They leverage their knowledge of the market and relationships with lenders to advocate for better conditions. By handling the loan search and application process, brokers save you time and effort. They streamline the process by managing communications with lenders and coordinating all aspects of the application.
They assess the risks associated with different loan options and help you understand the potential implications of various financing terms. If you face challenges or complications during the application process, brokers can provide solutions and alternatives to address issues.
Brokers are familiar with the nuances of financing different types of commercial properties, such as office buildings, retail spaces, industrial properties, and multi-family units.
You can also see the similar FAQ about Canadian banks:
Details of companies offering the financial services:
Bank Of Montreal
Head office’s address: 119, rue Saint-Jacques Montreal, Quebec H2Y 1L6
Contact center: 877-225-5266
Phone: 416-867-5000
Web-site: http://www.bmo.com/main/personal
Swift code: BOFMCAM2
Stock code: BMO
BSB: 001
RBC Royal Bank
Head office’s address: 200 Bay St, 9th Floor South Tower, Toronto
Contact center: 800-769-2511
Web-site: http://www.rbc.com/canada.html
Swift code: ROYCCAT2
Stock code: RY
BSB: 003
Scotiabank
Head office’s address: Scotia Plaza, 44 King Street West Toronto
Contact center: 800-472-6842
Phone: 416-866-6430
Web-site: http://www.scotiabank.com/ca/en/0,,2,00.html
Swift code: NOSCCATT
Stock code: BNS
BSB: 002
TD Bank
Head office’s address: Toronto-Dominion Centre, Po Box 1 Stn Toronto Dom, Toronto
Contact center: 866-222-3456
Web-site: https://www.td.com/about-tdbfg/our-business/index.jsp
Swift code: TDOMCATTTOR
Stock code: TD
BSB: 004