By : Radu Arvatescu
Purchasing an office building is a significant investment, but it can result in lucrative returns. As one of the largest purchases you can make as a business operator, it’s likely that you will need the assistance of office building mortgages in Ontario.
The right mortgage will give you competitive rates and terms that work for you, allowing you to develop a stable, continual, and increasing income source from your new asset.
What Do You Need to Qualify for Office Building Mortgages in Ontario?
There are some key and generally inflexible requirements that lenders apply to office mortgages.
- A significant down payment is usually required on a commercial property. Most lenders expect a minimum of 20%. Some minimums go as high as 25%.
- An existing property needs a proven revenue stream to be considered viable for office building mortgages. Most appraisers will look for a minimum of $1.30 revenue for every $1.00 of operating expense/debt incurred. Before you buy, it’s important to look at detailed financial records for your own peace of mind. Lenders will also want to see these records.
- Buildings need to be fully inspected and appraised by a registered professional. The lender may sometimes require that these professionals are selected from an authorized list.
- If a building is already occupied, you will have an advantage in the mortgage process. If it is partially occupied, then the lender will take vacancies and potential future earnings into account.
- You will need a detailed business plan demonstrating the ability to run a commercial office building with the resources that you have.
Other requirements like business net worth, assets, and existing debt will all factor into your application. Lenders go to great lengths to assess risk on every mortgage.
Suitable Property Types for Office Building Mortgages
Office building mortgages in Ontario don’t just cover large multistory buildings. There are several different property types that are suitable for a commercial mortgage.
Some of these include:
- General-purpose office buildings and mixed-use buildings.
- Single and multi-tenant commercial buildings.
- Dental offices and medical offices.
- Developments like commercial and industrial parks.
Before you even start the application process, it’s important to be upfront with the lender regarding the building type and purpose. This will eliminate any time wasted if the lender decides that they don’t want to extend credit based on the location.
How to Get the Best Rates on a Commercial Mortgage
Commercial mortgage rates can be complicated. They don’t always follow the prime rate seen in the wider mortgage industry. The type of commercial building, the finances of your business, and credit history can all influence the rate that is offered.
Because the marketplace is complex, it pays to work with a broker rather than directly through a lender. A broker can handle documentation requirements, processing, and submission to lenders. When you hire a broker, they will actively work to find the best rates based on your unique situation.
While brokers aren’t lenders, they do have a deep understanding of office building mortgages in Ontario. A broker acts as a consultant as well as a liaison. You can get help to compile the right application with documentation that will appear favourable to lenders. Many borrowers get caught out on technicalities.
Purchasing a commercial office or financing the construction of a new one could provide a long-term revenue stream and a great return on your investment. Office building mortgages in Ontario can help you to achieve your goals.
If you want the best chance of success when exploring the mortgage market, always work with a trusted Canadian broker that can deliver results.
To book an appointment to discuss your needs and learn more about how Mortgage Capital Investment can help you, call 416-877-7438 or
Lowest Residential Mortgage Rates in Canada*
|Term||OUR RATE||Bank Rate|
|3 Year Fixed/ 25 yrs||2.54||2.850%|
|3 Year Variable/ 25 yrs||0.99% Promo||1.86%|
|5 Year Fixed/ 25 yrs||2.64%||2.84%|
|5 Year Variable/ 25 yrs||1.20% Promo||1.65%|
|5 Year Fixed/ 30 yrs||2.74% Promo||3.04%|
|5 Year Variable/30y||1.45||1.85|
Updated: JAN 17, 2022
* Current promotion rates may provide an additional 0.05% 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.
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.