By : Radu Arvatescu
There’s often confusion in the market when it comes to industrial mortgages in Ontario. Do they differ from other commercial mortgages, is the application process unique, and are there hidden costs? These are likely some of the questions that you’ve already asked. Getting answers can help you to make an informed decision for your next investment.
Learn what constitutes an industrial property, the specifics of a mortgage application, and find out the best way to shop for a mortgage in Ontario’s lending marketplace.
About Industrial Real Estate
In the simplest terms, industrial property is any piece of real estate that is primarily used for industrial purposes. These properties can serve different functions and are used by a vast range of unique businesses.
When most people think of industrial real estate, they think on a large scale. This isn’t always the case. Small and medium industrial properties do exist, with single buildings that are designed and zoned for industrial purposes.
There are countless types of companies that can operate on industrial property. You can get a better idea of the definition by considering some of the most common examples.
- Logistics companies.
- Warehousing and storage companies.
- Fabrication companies (metal, glass, plastics etc.)
- Research laboratories.
- Auto mechanics.
The structure on an industrial property can be mixed-use. Most plants and warehouses combine small office spaces with larger open floors.
If you are planning to invest in a property that is either zoned for industrial use or functionally industrial in nature, you will need a specialized loan product.
Industrial Mortgages in Ontario: What’s Different?
Industrial mortgages are still considered other commercial mortgages, but some aspects of the application and closing process are unique.
Requirements like a business and personal credit rating and financial history are common to all commercial loan products. However, documentation requirements may be highly specific when applying for industrial mortgages in Ontario.
A lender will want to see:
- Your business plans for industrial property. Will you be occupying the property with a business you own, or will you rent it to tenants? If you will rent the property, details like current tenants, earnings history, and projected future earnings will be requested.
- If you’ve operated a business in the past (whether standard commercial or industrial), your lender will want to see the financial history of that business. This will help them to assess your creditworthiness.
- Depending on your intended use of industrial property, you may be required to produce an environmental impact report. This will let the lender know if you will be operating within the law. If the site is likely to have an environmental impact and you don’t produce a report, you will dramatically reduce the likelihood of approval.
Are There Hidden Costs?
Industrial mortgages in Ontario don’t come with any specific hidden costs, but you will need to consider the usual factors.
Insurance, closing costs, renovations and repairs that you might need to perform should all be considered as you assess your purchase. Downtime from renovations should also be predicted so that you can prepare for any potential period of lost income.
The environmental impact report will typically need to be produced at closing, so this is another cost that you need to consider.
Get Help to Find the Most Competitive Industrial in Mortgages in Ontario
As with all commercial loans, shopping the market privately will not be an efficient use of your time. An industrial mortgage is best managed by a broker in Ontario. Your broker will be able to leverage their extensive network of lenders to find the most competitive rates and a term that suits you. They will also aim for the lowest possible fees so that you can save on the total cost of lending.
Trust an experienced mortgage broker to navigate the complexities of industrial mortgages in Ontario.
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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.