By : Radu Arvatescu

If you are looking to invest in a hotel business, you’ll need some financial assistance. Mortgages and loans are used in the real estate industry to help businesses expand or become established in their market. You’ll need to know the difference between hotel mortgages in Ontario and hotel construction loans to determine which is best for you.

Explore the details below and find out how professional consulting can simplify the application and closing process.

Understanding Hotel Mortgages in Ontario

Hotel Mortgages in Ontario are like residential home loans, with a few exceptions that tailor the product to a commercial environment.

These mortgages can be used for refurbishment, remodeling, acquiring a hotel franchise business, or buying a hotel outright from a seller. In most cases hotel mortgages in Ontario are used to purchase existing structures. Mortgages can also be taken out on a hotel that you already have equity in, for the purpose of complete refinancing or cash-out refinancing.

To be eligible for a new hotel mortgage, you will need to meet certain criteria.

  • A 25% down payment is the minimum that you can expect to find on the market. Some lenders require up to 35%.
  • An expense and income forecast must be provided.
  • You will need proof that the mortgage will be serviced by hotel operations and not another form of business (such as secondary services offered by the hotel.)
  • Location matters. Lenders will favor hotels that have a proven clientele or that are near tourism or commercial hotspots.
  • The condition of the property will be assessed to determine value and risk.

A hotel is a major investment but it’s one that can secure your future. You can work with a broker to buy a hotel or perform upgrades on an already successful business.

Understanding Hotel Construction Loans

You can use a hotel construction loan to expand or improve a hotel. However, the most common usage is for new projects.

Construction loans are quite different from other loan packages. The most significant change is that you won’t receive the full amount of the loan up front. You will work closely with a lender or broker to develop a draw schedule. This will keep your project fluid as it advances. As an example, the initial payment would likely be used for clearing and site grading, followed by another draw for the foundation, and then for each major milestone. You’ll need to engage with your development contractor to determine how the project would advance and at which stages you would be billed.

The lender remains involved throughout the process, and they may perform inspections as milestones are met. This continues right up until the full amount of hotel construction loans has been allocated.

While this might seem complicated, there’s a significant advantage to this system. You will only pay interest on the cumulative value that you have received. In effect, you won’t make any full interest payments until the completion of the project, which is when amortization begins.

Why You Need a Broker for Hotel Mortgages and Loans

Compiling documentation and submitting applications can be stressful and time intensive. Even researching the companies willing to offer you a loan can be a significant hurdle.

A broker that specializes in hotel mortgages in Ontario will maintain a vast network of professional contacts and lending institutions. They can find you the right support and the best rates on both construction loans and mortgages.

When you choose to work with a broker you will be able to secure a mortgage faster, and for a nominal fee when considering the total value of lending. Your focus should be on growing your business and establishing your market presence. Your broker will take care of the finer details for you, so that you can work on what you’re best at.

To book an appointment to discuss your needs and learn more about how Mortgage Capital Investment can help you with a hotel mortgage or hotel construction loan, call +1 289-800-4840 or email

Lowest Residential Mortgage Rates in Canada*

Term OUR RATE TD Bank Rate
3 Year Fixed/ 25 yrs 5.24%Promo 5.86%
4 Year Fixed/25 yrs 5.24% Promo 5.62%
5 Year Fixed/ 25 yrs 4.89% Promo 5.62%
5 Year Variable/ 25 yrs 6.10% Promo 6.90%
5 Year Fixed/ 30 yrs 5.19% Promo 5.72%
5 Year Variable/30 yr 6.50% 7.00%
3 Year Fixed/30yr 5.39% Promo 6.96%
**NEW RENTAL 5 Year Fixed /30yr 5.29% Promo 5.77%

Updated: Feb 20 , 2024

* Current promotion rates may provide an additional 0.05% discount or may be anytime discontinued at the Lender discretion.Some condition may apply.Rates may vary between geographic regions and the posted rates on this website may not be available in your area.TD Bank rate used for comparable are the rate listed in the Broker Chanel Portal by TD Canada Bank at the date above. Please contact our MCI office for more details and current promotions.

LOWEST REGULAR RATES IN CANADA*   * Current promotion rates may provide an additional 0.10% discount. Rates may vary between geographic regions and the posted rates on this website may not be available in your area. Please contact our MCI office for more details and current promotions.

Contact Us

    Fields with (*) are required

    Accept the terms and conditions.

    contact us