Commercial mortgages
Commercial financing works differently from a home mortgage. We help business owners and investors understand what a lender needs to see before applying.
- Mixed-use and commercial properties
- Buildings with five or more units
- Owner-occupied business space
- Documents and property reports
Lenders look at the property's income
Commercial underwriting focuses on the income the property produces and how well it covers the loan payments. Lenders also look at the borrower's finances and experience. Expect a larger down payment than on a home.
Reports add time and cost
Commercial files usually need an appraisal and may need an environmental or building condition report, paid by the borrower. Any fee on a commercial file is disclosed to you in writing before you commit.
Answers
All answersWhat is a private mortgage?
It is a loan from a private lender or mortgage investment corporation instead of a bank. Approval depends mostly on the property and your equity. Terms are usually short, often one year.
How much does a private mortgage cost?
Rates are higher than bank rates, and there is usually a lender fee plus any brokerage fee. Every fee is disclosed to you in writing before you commit. Legal and appraisal costs are extra.
When does a private mortgage make sense?
It can make sense as a short-term bridge, such as after a credit setback or when a regular lender cannot approve you in time. The plan should include how you move to a regular lender when the term ends.
What is a second mortgage?
A second mortgage sits behind your first mortgage on title and usually comes from a private lender. It lets you access equity without breaking your first mortgage, at a higher rate.
How is a commercial mortgage different from a residential mortgage?
Commercial lenders focus on the income the property earns and how well it covers the payments. Down payments are usually larger, and files need more reports, such as an appraisal and sometimes an environmental review.
Is a building with five or more units a commercial mortgage?
Usually, yes. Residential buildings with five or more units are generally financed as commercial, with different programs and documents.