What You Should Know Before Applying for Motel Mortgages in Ontario

By : Radu Arvatescu

If you are purchasing a motel to start your career as an entrepreneur in the hospitality industry, you will need to compare motel Mortgages in Ontario. Mortgages and associated motel financing rates can be a lot to take in, especially if you’re new to the industry.

Here’s what you need to know about this specific subset of the commercial mortgage market, and how you can get help to apply for and close on a loan.

Do Motel Mortgages Differ from Other Commercial Mortgages?

Motel in Mortgages in Ontario are mostly similar to standard commercial real estate mortgages. Lenders evaluate each mortgage loan based on the viability of a property and the business behind it. Appraisers will look at some key data to determine your creditworthiness and risk.

• Your debt service coverage ratio will be calculated. This is your total annual operating income divided by debt service. A ratio above 1.25 is usually enough to receive an offer from a lender.
• Business credit score will be evaluated to see your financial history and the likelihood of paying back a mortgage.
• Your personal credit history is likely to be analyzed, even if you run a limited liability business.
• The property itself will be looked at. This will serve as collateral on motel Mortgages in Ontario. Lenders need to be sure that the property value and conditions are proportionate to the mortgage application.
• Forecasted income will also be considered.
• The physical location of the motel is important. Lenders prefer motels that are in prime locations that have active tourism or commercial markets.

What Does the Rate Environment Look Like Today?

According to the latest data from the Bank of Canada, the average prime mortgage rate throughout 2019 has remained at 3.95%. Think of the prime rate as a benchmark. It is not the rate that will be offered by lenders. It is the best possible scenario for the most creditworthy borrower. Commercial motel Mortgages in Ontario carry a higher risk than residential mortgages, so the real interest rate will be notably higher than prime.

Lenders also add a premium over the prime rate, which is where they derive their revenue from.

Depending on risk assessment and your own creditworthiness, your rate offer could be closer to 6%. In some cases, the interest could be much higher. The only way to determine the real motel financing rates for your situation is to talk to a lender or work with a broker.

How Can You Get the Best Motel Financing Rates?

If you need to apply for motel Mortgages in Ontario, you will need to consider the best way to get it done. Banks, private lending unions, and direct mortgage providers are all options. They’re also the most inefficient way to buy a mortgage.

If you go directly to a lender, you’ll have limited success in finding the best motel financing rates. On top of that, you’ll find that it can be overwhelming to compare packages and rates. Even submitting your documentation can be a significant undertaking.

You will find a better solution with a mortgage broker. Highly trained and experienced, mortgage brokers will work directly with lenders as your official representative. They rely on established networks to locate the very best motel financing rates with terms that are suited to your needs.

When you purchase real estate, you work with an agent. Working with a mortgage broker is a similar concept. They present the best offers to you so that you don’t need to do the legwork. Because the rates are more competitive, you’ll ultimately save money, despite paying a broker’s fee.

If you want the best motel financing rates and a simplified application process, a commercial mortgage broker is your best option moving forward.

To book an appointment to discuss your needs and learn more about how Mortgage Capital Investment can help you, call +1 289-800-4840 or email info@mcinvest.ca.