One of the easiest places to start with a commercial mortgage is the equity that will be involved. In previous posts we have discussed the three (3) different types of financing available including Traditional Banks, Mid Market and Private Lenders. The basic rules of thumb are as follows:
- Traditional Banks – commercial mortgages provided by this group are usually up to 65% of the value of a property or the purchase price of a property
- Mid Market Lenders – with this group, mortgages can be available for more than 65% of the value or a property (or purchase price) but less than a Private Lender
- Private Lenders – in some cases you may be able to get up to 80% in mortgage financing subject to the quality of your net worth, property and general credit worthiness
There are exceptions to the above when you are seeking a commercial mortgage for a property that your business occupies. Traditional Banks can provide up to 90% of the property value using the Canada Small Business Loan program if the purchase is equal to or less than $500,000.
If you have collateral properties, or other properties that can be used as security, you may be able to get 100% financing by using the equity of more than property to meet the requirements. Banks and lenders will look for as much security as they can get and if you have additional security to offer you may be able to fully finance a property purchase.
If you need some direction on your deal as it relates to equity or down payment, email me (dylan at bridgecap.ca) or add a comment below.