Commercial Mortgages

While the process is fairly complicated to obtain a commercial mortgage, qualifying for a mortgage is largely based on the following items:

Debt Service Coverage Ratio (DSCR)

As the primary consideration of most lenders, this is the ratio of net operating income available versus the required mortgage payments. As experts, we deal with many different lending institutions, which have different minimum servicing requirements based on their loan policies for the different asset classes (property types). By knowing this, we can prepare and present your application to the right lenders, which greatly reduces turnaround time.

Loan to Value and Down Payment

Most conventional lenders have a maximum Loan to Value amount of “up to 75%” of the purchase price or appraised value (whichever is less). This means that the minimum down payment required by a borrower to put down on a new purchase or retain as equity on a refinance is 25% of the property’s value as identified above.

This Loan to Value amount is further limited by the borrowing entity demonstrating the ability to service the requirement mortgage payments. With property valuations ever increasing, down payments and/or equity value within properties is commonly 30% or 35% meaning that the mortgage amount would be closer to 65% or 70%.

That said, don’t be intimidated if your Loan to Value or Down payment needs are different, as Impact Commercial has access to funding relationships who offer mortgages outside the conventional approval guidelines.

Credit History

Lenders put their funds at risk for a predictable and safe repayment stream of principle and interest. With this focus, they believe that the best predictor of future repayment behaviour is a borrower’s past behaviour. A strong business and personal credit profile indicates to lenders that you are committed to meeting the negotiated repayment schedule.

That said, don’t be intimidated if your credit profile is not optimal. Impact Commercial has extensive experience improving a variety of credit profiles and obtaining financing with satisfactory rates and terms despite adverse credit history.

Current Business Situation

If you are currently in operation, lending institutions expect your business to be profitable and steady to ensure a sound investment. Examining your business plan and financial projections provides lenders an inside view of your operation. Impact Commercial works collaboratively with you to ensure the key areas that lenders concentrate on are included and emphasized in these reports.

Type of Business

With numerous business types, commercial mortgage terms are based around the business structure as well as the property you want to purchase. This is where Impact Commercial excels! We put our innovative solution-seeking methods into practice to ensure you obtain the best financing opportunity.

15 to 30 Days to Receive Full Credit

What’s My Timeline?

While it is widely known that mortgage pre-approvals exist with residential mortgages under an individual’s name, there is now such a process within the commercial mortgage market. Commercial mortgages often require a substantial amount of information, plus the receipt of a commercial property appraisal to obtain full credit approval. As such, it is common for commercial mortgages to take 15 to 30 days to receive full credit approval and another 10 to 15 days afterwards to fund.

Yes, there are opportunities to shorten this timeline but it requires sufficient preparation to achieve. At Impact Commercial, we specialize in providing commercial mortgage solutions and we’d value the opportunity to plan out your commercial mortgage needs with you.