Ontario commercial mortgages are designed for businesses and/or investors who want to purchase or refinance an income producing commercial property. Commercial properties can include retail centres, condo developments, apartment buildings, office buildings, industrial properties, retirement homes, zoned land and more.
Like residential mortgages there are many different types of commercial mortgages and many different types of commercial mortgage lenders.
Commercial mortgage brokers can be a major asset to a borrower or residential broker or agent because commercial mortgages are complex. Commercial mortgage financing is a very specialized field and few brokers specialize in this type of financing. Even experienced residential mortgage brokers and agents will turn to a commercial mortgage broker as a trusted advisor and partner to help them get their commercial deals financed.
What should you look for in a commercial mortgage broker?
Flexibility – Your commercial mortgage broker should offer many financing options and be flexible.
Commitment – When working on complex financing there is nothing worse than working with a mortgage broker who is not there for you. It is important to establish a relationship with a trusted advisor and business partner that you can rely on. This means they should answer and return calls promptly and be prepared to be an advocate for your deal.
Resources – A good commercial mortgage broker will work with both banks and asset based lenders including private lenders. This ensures that if something changes in your deal there will be a “plan b”. They should also have a strong rapport with their lenders and be able to access decision makers on demand.
Range of Products – They should be able to offer you access to first mortgages, second mortgages, construction financing, mezzanine financing, joint venture financing, private lending and more.
Expertise – Your commercial mortgage broker should have substantial expertise and experience that one only comes by with many years in the business. Experience should include financing development and re-development projects, debt structuring as well as experience conducting project viability assessments.
Generally speaking commercial mortgages can be divided into one of two categories:
Owner occupied commercial mortgages – the owner of the property has his/her business occupying at least 51% of the space in the building that is to be financed.
Investment commercial mortgages – the owner of the property will occupy between 0% and 50% of the available space in the building that is to be financed.
A good commercial mortgage broker is a major asset to both borrowers and residential mortgage agents and brokers because commercial lending is specialized and relies on an acquired skill set. Also lenders tend to be much more difficult to deal with when it comes to arranging commercial mortgage financing. They will want an abundance of detail about the security being offered. This could include the type of business the client is engaged in, business plans, business records, whether or not the building is occupied as well as rent roll, environmental report, building condition, and specific insurance detail. Outside of approving credit, they will assess the overall viability of the borrowers business. Asset based lenders including private lenders tend to be somewhat more flexible because they lend more so based on the equity in the real estate rather than the character and credit worthiness of the applicant. A good commercial mortgage broker will know how to assess the application and identify potential issues before they become issues and propose viable and effective solutions to ensure that you are successful obtaining financing.