Commercial mortgage
Main features
Important Points
Characteristics | Commercial Mortgages | Residential Mortgages |
Who is it intended for? | Commercial or real estate companies | Regular home buyers, small investors |
Interest rates | Higher | Lower |
Reference interest rates | 5-year Bank of Canada bond | Bank of Canada overnight financing rate |
Maximum LTV | 85% | 95% |
Maximum amortization | 40 years | 25 years |
CMHC insurance availability | ✓ | ✓ |
Qualification criteria | Real estate income generation, borrower's finances | Borrower's finances |
Why XPERTO for your commercial mortgage?
Using a commercial mortgage broker is a major advantage for obtaining optimal financing in Quebec. Their market expertise allows them to negotiate the best rates with financial institutions, often more favorable than if you tried on your own. The broker also guides you through sometimes complex administrative procedures, such as compiling files with environmental reports and building assessments. Their knowledge of banking processes saves time and energy in your financing search. With a strong network among banks, trust companies, and credit unions across the country, they explore the best mortgage loan for your project on your behalf.
The fees for opening the file, the fees of the appraiser, the notary fees and insurance must be provided for. These fees can total between 2% and 5% of the amount borrowed.
You will need the last 3 years of your financial statements, your corporate tax return, your banking information, the personal balance sheet of the managers and the details of the property to be mortgaged.
Some lenders offer options such as repaying only interest during an initial period or a gradual repayment to give the business a grace period.
Yes, it is possible to obtain a mortgage pre-authorization. This makes it possible to present proof of funds to a seller during the acquisition process.
The lender may require immediate repayment of the balance or seize the mortgaged property. It is important to contact the lender quickly in case of financial difficulties.
Yes, if the value of the building has increased, the owner can apply for refinancing and recover equity in the form of cash. This allows you to invest in the company.
Yes, some programs such as the FTQ Local Solidarity Fund offer additional financing or loan guarantees to SMEs. The provincial government may also have assistance programs.
Here are some documents that the bank / commercial lender can request:
- Detailed business plan describing the company’s activities and financial projections for the next 2-3 years
- Financial statements for the last 2 years (3 years for new companies)
- Personal and business tax returns for the last 2 years
- Detailed personal balance sheet of the main managers/shareholders
- Proof of regular income of managers/shareholders
- Copy of the commercial lease if the building is rented
- Copy of the purchase offer if the loan is for an acquisition
- Copy of authorization certificates necessary for commercial activity
- Professional evaluation of the value of the building
- Copy of invoices/submissions for renovations if the loan is for renovations
- Personal guarantees or other assets from managers
- Proof of adequate insurance on the building and commercial activity
It is important to properly document the company’s repayment capacity and the value of the guarantees offered. A mortgage broker can also advise on the specific documents to be provided.