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Commercial Mortgage, What lenders look for?

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Joshua01
Posts: 1
Joined: Fri Jan 19, 2018 2:52 pm

Commercial Mortgage, What lenders look for?

Postby Joshua01 » Fri Jan 19, 2018 2:57 pm

Hi,

I have seen many people find it difficult to get approved for a commercial mortgage. As it is very important to know the commercial mortgage criteria in Canada, I would like to share some factors here. A commercial mortgage is a loan taken out on a commercial real estate with the property used as collateral. While applying for a commercial mortgage, the lenders look for the following things:

Debt service coverage ratio. This is the main criterion that lenders will look at and is essentially the ratio of cash available to the required loan payments.

Credit History. Most lenders will require a good personal credit score as well as evidence that your business is creditworthy.

Current business situation. If your business is up and running, commercial lenders expect your business to be profitable and steady.

Type of business. The terms of a commercial mortgage are dependent on the type of business as well as the property you want to purchase.

Down payment. A higher down payment is expected of a commercial property. A typical down payment on a mixed property falls between 20- 35%.

We should be prepared before applying for a commercial mortgage. It is usual for the investors to ask for multiple documents that ensure their investment will be safe on a property.

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