If you are an investor who is hoping to invest in commercial property for whatever purpose, we know that you probably have many questions surrounding this matter. As such, we’ve compiled a list of the 5 most frequently asked questions surrounding commercial mortgage.
1. What is a commercial mortgage?
A secured mortgage loan for an office building, warehouse, apartment building, or a shopping center, is also referred to as a commercial mortgage loan.
2. How long does it take to secure a commercial mortgage?
While a residential mortgage loan may be approved quickly, a commercial mortgage loan can take up to 6 months to get approved through a bank. A mortgage broker can decrease the length of time it takes to get approval.
3. What can I expect during the approval process?
During the approval process, your mortgage broker will:
- Help you to meet the mandatory conditions
- Review in-depth appraisals, engineering, and environmental reports
- Review background checks
- Establish any potential assets and/or liabilities of the prospective business
- Review your finances
- Take all reasonable steps to make sure you and/or your property sponsors meet all legal requirements when buying the commercial
Although the fee for environmental reports can be as high as $2,000, one of the biggest advantages of hiring a mortgage broker is that it can help to reduce the length of time it takes to get approved for a commercial mortgage loan. Most importantly your mortgage broker will ensure that those completing your appraisals or reports are on the approved list. Not only will you mortgage broker help to shorten the processing time, but they will also help you to ensure that you are prepared for the process itself, thus improving your chances for approval.
While it is possible to attempt to prepare yourself, it’s not recommended if you are not able to commit a majority of your time with it as your primary focus. If you approach banks unprepared, it’s less likely you would be able to negotiate if you are unprepared.
4. How do I get a commercial mortgage in Canada?
If you are a Canadian investor, you should know that since commercial tenancies are more lengthy than residential tenancies, so managing them is much easier, even with higher interest rates. Leasing for 5 or 10 years is easier than 1 year at a time.
5. What if I am looking for a construction loan to build a new commercial property?
If you are planning on building a new commercial property, you need to apply for an interim finance loan. Since these types of loans are typically more difficult to manage and there are many issues that can arise, it’s extremely important to hire an experienced mortgage broker to assist you through this process.
Do you still have other questions? AKAL Mortgages would love to hear them and provide you with the answers you’re looking for to help you to determine what type of mortgage you require, how much you can save on your existing mortgage, and tell you what’s affordable for you. When we say YES! We stand behind our promise. So why wait? Contact AKAL Mortgages today.