Associated Business Group
Real Estate Financing Canada
How to Choose Commercial Real Estate Financing?
Commercial real estate is used for various business purposes like warehouses, office space, and production facilities. For this, Commercial real estate financing option helps the companies to make their purchases. The interest rate lies between 5% to 12% annually. However, some lenders provide commercial financing for both commercial and residential spaces.
It works like other traditional mortgages. This handy guide is all about helping you get commercial Real Estate Financing in Canada easily.
Figure Out how you will use your Commercial Real Estate Financing
Before you do anything else, determine how you will use your loan and what is your plan to use the loan? For instance, if you plan to buy a property, then approach the real estate agent. However, if you want to remodel your commercial property, find the remodeling contractor who can give you an idea of how much budget is required to remodel your property. In short, you should have a clear vision for getting commercial real estate financing.
Choose your Commercial Estate Financing Type
Once you have determined what you will do with your commercial real estate loan, then it is the right time to figure out what kind of commercial real estate loan you exactly need. After all, you will not prefer to use your construction loan to purchase a new real estate property. When you know why you need a loan for, choosing the loan type gets easier for you. Let’s understand different types of commercial real estate loans.
A purchase loan is designed to purchase a property and comes with long repayment terms for up to 20 years. A purchase loan is also known as a mortgage loan. On the other hand, a construction loan is designed for a short-term loan type with around 1 to 3 years of loan repayment terms. Then there is a refinance loan almost similar to commercial real estate. It enables you to lock in lower rates and lower your monthly payments.
At last, there are hard money loans that work great for the real estate investors who buy properties just for an investment purpose. These loans come with higher interest rates, and you can only get this type of loan from private lenders.
Find the Right Commercial Lender
Finding the best lender and get the loan is not easy as the lenders have strict lending policies. You have to meet certain criteria to get the money from the lender. Be sure you approach a couple of lenders and check their interest rates. Once you shortlist some good lenders, then they also check your credit score and the exact purpose of the loan. Lenders may also evaluate certain things that include personal credit history, coverage ratio, business credit score, annual revenue, and debt-to-income ratio. Lenders also look into your property type, purchase price, loan-to-value ratio, operating statements, and rental income (If any).
The final take
Getting real estate financing in Canada is likely to simplify for you now. If you put some effort, you will get the real estate financing to accomplish your goals.