What is a Commercial Mortgage?
A commercial mortgage is typically a long-term loan than provides the funding to purchase property that is not considered a residential home. It is generally given to a company or business as opposed to an individual.
CMHC will insure a commercial mortgage for a property that will be used as a residential property, such as an apartment complex, retirement dwelling, or condominium building.
Real estate that will be used as a residential property, such as an apartment complex, retirement dwelling, or condominium building is considered commercial and can be insured by CMHC. With CMHC-insured mortgages, rates can be as low as 1.24%.
A commercial mortgage can also be viewed as a source of business funding, by allowing the business to access equity as the property value increases over time. This extra funding can help with business growth by consolidating business debts, buying new equipment, renovating, and investing in more property.
How does a Business Loan Secured by Real Estate different from a Commercial Mortgage?
A commercial mortgage and a business loan secured by real estate are both methods of borrowing where real estate is used as collateral for the debt. This means that the lender is protected, in the event that you can’t keep up with your payments, by taking possession of the real estate.
One key difference is that a commercial mortgage is the lending tool that allows a business to initially purchase a commercial property, where as a business loan secured by real estate is taken out when a business or individual already owns or has equity in real estate.
This type of secured business loan is ideal for the owners of businesses that own assets like commercial property and don’t want to risk their personal assets should the business not be able to repay the loan.
Loans can be secured against commercial property owned by the business or owner’s personal property. If your business is new, you can put up your home as collateral for your business loan. If you default on your payments, the lender will recoup the loan by refinancing with the mortgage lender and claiming the title to your home.
Commercial financing is commonly used to purchase or renovate commercial property, but commercial financing can also be used to purchase land or cover construction costs.
We finance commercial mortgages for:
- Multi-residential
- Apartment buildings
- Condominium building
- Car dealerships
- Retail plazas, strip malls, and shopping centres
- Mixed-use buildings
- Office Buildings
- Industrial buildings
- Warehouses
- Landfill
- Land
- Farms
At Benson Mortgages, we understand that each business has its own unique set of requirements. Whether your mortgage comes through an institutional or private lender, we will find you the lowest rates and best terms, suited to your particular business needs.
