If you are looking to buy a business or non-residential property, and need a commercial mortgage, then Gert Martens at Dominion Lending Centres is the right mortgage broker for you. A commercial mortgage is any commercial property that is not residential. This can be any company, regardless of whether the business is a small partnership or a large corporation. Commercial mortgages are typically more expensive with higher interest rates compared with residential home loans.
A commercial mortgage can be used for any business, office, retail store, or industrial property. It can also be used for residential real estate if the property is purchased for investment purposes, and is not owner-occupied. This means you can get a commercial mortgage for a purely residential property of 1-4 units, 5 or more units, or a residential/commercial mixed property.
Types of Commercial Mortgages
The type of property you are buying varies on the loan-to-value (LTV) ratio. If you are looking to buy a residential/commercial mix, the max LTV ratio would be 80%. 5 or more units for residential investment would have an 85% LTV ratio. A commercial plaza, office, and industrial property’s max LTV ratio is 75%, and a farm land’s LTV ratio would be 55% max.
Obtaining a commercial mortgage takes a lot longer than your typical residential home loan. To get approved, this can take anywhere from 60 days to one year. It is important to do your research on different commercial mortgages so you are aware of the time frame, and can plan accordingly.
To qualify for a commercial mortgage, you will need to have a substantial amount of cash available. Your mortgage broker will check your finances to see if you can afford the monthly loan payments. You will also be expected to invest your personal money into your new property.
Another qualification is the personal credit score of the business owner. If you have a bad financial record, you will most likely not get approved for your commercial mortgage. In addition, if your business has been around for a while, you will need to show proof of your company’s profit. A financial institution will not lend you money if they think your business is not profitable.
The down payment on a commercial mortgage is far more expensive than a residential one. The down payment for home loans is typically around 20%, but for a commercial mortgage, you will need to pay around 50%.
For any questions on commercial mortgages, or to get started on your application today, please contact Gert Martens at 780-933-0109.