The lending guidelines for commercial mortgages are different from residential mortgages. The loan amount that a Vancouver commercial mortgage lender can provide is dependent on the rental income the property can generate to cover mortgage payment.
Generally, the interest rates for commercial mortgages are 0.75% to 1.5% higher than residential mortgages. The loan value that a Canadian Bank can offer you can vary from 50% to 90% (with CMHC insurance) of the property value.
Commercial Mortgage Broker
If you are looking for a commercial mortgage financing in Vancouver BC, you may want to talk to a commercial mortgage broker. When a commercial mortgage is arranged by a mortgage broker for a borrower, a fee of 0.75% to 1.5% on the loan amount is payable to the broker for arranging the loan.
The following revenue producing buildings are popular for small investors in the urban town centers of British Columbia:
- multi-residential units
- mixed-use retail and residential buildings
- plazas, retail malls and shopping centres
- office buildings, warehouses and medical centres
- industrial buildings
From the above commercial buildings, multi-residential apartment building mortgages are more appealing to the lenders. The reason is that lenders perceive rental incomes from apartment buildings are more stable and reliable. For the other types of commercial buildings, the cash flows from these property types are considered more volatile. A lender evaluates the suitability of a commercial building for financing based on location, quality and performance of the property.
Costly to change to another lender
A commercial mortgage once signed with a mortgage lender is very costly to switch to another lender a few years down the road. The reason is because all the expenses including application fee, appraisal cost, lawyer fees, etc (amounting to several thousands dollars) have to be paid again when the loan is switched over to another lender. Therefore, it makes sense for you to work with a good commercial mortgage lender that can offer you a good interest rate.
If you are looking for a better interest rate or higher loan amount for your commercial mortgage in the Greater Vancouver area to finance your purchase, you can contact James Wong at 604-721-4817 or email me.