If you’re seeking a commercial mortgage in Ottawa, it’s important to know what options are available and if you qualify for any special programs. Many small business owners that are considering their first commercial property purchase don’t know where to begin. This is why it’s a good idea to allow a mortgage agent to do most of the leg work for you. This guide reviews the key differences between residential and commercial mortgages.

What’s the Difference Between Residential and Commercial Mortgages?

A commercial mortgage can be utilized when purchasing a multi-unit, mixed-use, commercial, and/or even an industrial property. Moreover, it can be used either for a property you intend to operate as a business owner or for one you intend to rent out to commercial tenants.

A bank would typically consider a property as commercial in nature if it is so by design (for instance, if the property is a shopping centre or office building). Alternatively, they generally treat residential properties with four or more units as commercial. Residential mortgages tend to have lower interest rates, but there are many more options available if you’re looking for a commercial loan.

Business Loans

Before applying for a loan, you need to know what type of mortgage is most appropriate for your situation. Just a few of the types of business loans that you could qualify for include the following:

Traditional Commercial Mortgages

These are the most similar to residential mortgages. You put the property up as collateral and pay it off over a longer timeframe. It can also be more difficult to qualify for a traditional loan.

Commercial Bridge Loan

These are shorter-term mortgages that allow you to get money right away to cover your needs until you find a long-term solution. They typically come with higher rates and need to be paid off quickly.

Benefits of Working with a Commercial Mortgage Broker

If you’re confused by all the various types of loans you may be able to apply for, you’re not alone. A commercial mortgage broker or agent has experience working with lenders, knows the requirements to obtain a mortgage and can guide you to the right type of loan for your specific business. Another benefit is that your broker has access to a lot of lenders you wouldn’t, and can show your application to more lenders in the hopes of finding you a better deal.

Frequently Asked Questions

Most often, yes. Just how much higher depends on the type of property you’re buying. For example, industrial-type properties often have higher interest rates compared to multi-unit apartments.

Lenders want to be sure that you’re going to pay your bills. If you don’t, the lender wants to know that they can recover their loss, so they also evaluate your collateral. The lender will firstly look at whether or not the property is marketable. From there, they will also review the profile of the guarantor. This includes assessing creditworthiness, income, and the debt-to-income ratio.

You certainly can obtain a mortgage on a commercial building. However, bear in mind that you may end up paying a higher rate.

You can get a residential mortgage on smaller multi-unit properties, such as a four-unit building. Larger multi-unit properties require a commercial mortgage. You will not be able to get a residential mortgage on other commercial properties like offices or industrial buildings. An experienced mortgage broker can help you find the loan that best aligns with your goals.

You may qualify for a fixed-rate or variable-rate commercial loan. There are quite a few different types of commercial mortgage types that you may be unaware of, so make sure to let your broker know your goals when deciding what’s right for you.

There are a number of factors lenders take into account when assessing risk. For instance, larger loans are immediately considered higher risk because more is at stake. There are also less potential buyers for the properties so they would be harder to sell.

Contact Us

Chris Allard has years of experience helping people obtain various commercial mortgages in Ottawa. We can help you determine what type of loan to apply for and find a lender that offers the most reasonable terms. Contact us today to learn more about your financing options so that you can make an informed decision before borrowing.

Your Top Choice For Private Commercial Mortgages And Business Loans

Chris Allard’s team is the perfect choice for financing your commercial investment.
Some of the more typical commercial financing needs of his clients include:

Commercial Mortgages

  • Multi-family properties
  • Shopping plazas
  • Medical buildings
  • Vacant commercial or industrial land
  • Commercial construction financing

Business Loans

  • Investing in a retail business
  • Investing in office space
  • Loans for start-up businesses

Other special-purpose properties Chris can finance include:

  • Gas stations
  • Condo corporate loans
  • Warehouses
  • Golf courses
  • Banquet halls
  • Funeral homes
  • Hotels
  • Churches
  • Retirement homes

The Allard Difference

Chris’s team will always put your interests first, no matter what your financing goal is. Whether you are seeking an investment vehicle to propel you to wealth, looking to get back on track with your bad credit, buying your first family home, or renewing your mortgage, Chris Allard works with you to explore your options and pick the one that meets your needs.