A business could be incorporated, a limited company, or a partnership, which makes assessing credit history more complicated. Repayment is dependent on the health of the business/company. Whereas a borrower will do anything possible to make monthly mortgage repayments to avoid being kicked out of his/her home, a business that is not doing well may simply declare bankruptcy. This risk leads to mortgage rates that are significantly higher than those of residential mortgages. This is why you need a mortgage broker. We will help you get a lender with the lowest possible rates.
The debt service coverage ratio is the main qualification criterion lenders use. This is the ratio of available cash to the cash required to make mortgage repayments. The lender will expect your business or company to be making a steady profit. We will help you prove that your business is steady by providing such things as financial projections and business plans. The loan-to-value-ration given by most lenders require borrowers to invest some of their own money. Note the available funds need to be liquid and not in equity. Another reason you need our team is that we hasten the process. It takes between 60 days and a year for a commercial mortgage to go through. Our relationship with lenders allows us to get your mortgage in a good time. Commercial mortgage lenders do not usually advertise their lending criteria and rates, making it difficult for borrowers to compare different lenders. We know Toronto mortgage lenders and we will assist you to compare different offerings. You will be expected to make a big down payment on a commercial mortgage. For a mixed property, this falls between 20% and 35%. For purely commercial property, this can go as high as 50%. The exact amount depends on your risk profile. We will ensure that your risk profile is favorable to reduce the down payment requirement.
