Question 1

What is a commercial mortgage in Ontario?

Accepted Answer

A commercial mortgage is a loan secured against income-producing or business-use real estate, including multi-unit residential (5+ units), office buildings, retail centres, industrial facilities, and mixed-use properties. Unlike residential mortgages, commercial financing is underwritten primarily on the property's income potential rather than just the borrower's personal income.

Question 2

What loan sizes do you typically handle?

Accepted Answer

We specialize in commercial mortgages starting at $2M and routinely structure transactions up to $25M+. For high-value residential properties (owner-occupied homes over $1M), we work with uninsured lending channels. Our focus on larger transactions allows us to provide institutional-grade service and lender access.

Question 3

Do you work across all of Ontario and Canada?

Accepted Answer

Yes. While our principal office is in Ottawa, we serve clients throughout Ontario—from Toronto and the GTA to Northern Ontario communities. We also arrange financing for qualified borrowers across Canada, with established lender relationships in most provinces.

Question 4

What property types do you finance?

Accepted Answer

We finance a wide range of commercial and investment properties: multi-unit residential (5+ units), purpose-built rentals, office buildings, retail plazas, industrial warehouses, mixed-use developments, student housing, seniors housing, and special-purpose properties. Each asset class has distinct underwriting criteria.

Question 5

What is the first step before applying for commercial financing?

Accepted Answer

The first step is a confidential consultation to understand your objectives, property details, and timeline. We review your rent roll, income documentation, and borrower profile to identify the optimal financing structure and lender channels before any formal application.

Question 6

What is DSCR and why does it matter?

Accepted Answer

DSCR (Debt Service Coverage Ratio) measures whether a property's net operating income (NOI) can cover its debt payments. Calculated as NOI divided by annual debt service, a DSCR of 1.25x means the property generates 25% more income than required for loan payments. Most institutional lenders require minimum DSCR of 1.20x–1.30x.

Question 7

How is NOI calculated for commercial properties?

Accepted Answer

Net Operating Income (NOI) equals gross rental income minus operating expenses (property taxes, insurance, maintenance, utilities, management fees). NOI excludes debt service, capital expenditures, and income taxes. Lenders typically use trailing 12-month (T12) financials and may apply vacancy and expense adjustments.

Question 8

What is LTV in commercial financing?

Accepted Answer

Loan-to-Value (LTV) is the loan amount divided by the property's appraised value. Commercial LTV typically ranges from 65%–75% for conventional financing, with CMHC-insured multi-unit loans potentially reaching 85%–95% under MLI Select programs. Higher LTV generally means higher interest rates or insurance premiums.

Question 9

How do lenders assess vacancy and expenses?

Accepted Answer

Lenders apply standardized vacancy factors (typically 3%–5% for stabilized properties) and may adjust reported expenses upward if they appear below market norms. Management fees are often normalized to 3%–5% of gross income even for self-managed properties. These adjustments ensure underwriting reflects sustainable income.

Question 10

What documents support property income claims?

Accepted Answer

Key income documentation includes: current rent roll showing all units, lease terms, and tenant details; trailing 12-month (T12) operating statement; copies of commercial leases; property tax bills; insurance certificates; and utility bills. Corporate borrowers also provide financial statements and tax returns.

Question 11

What is a cap rate and how does it affect financing?

Accepted Answer

Capitalization rate (cap rate) is NOI divided by property value, expressing yield as a percentage. Lower cap rates indicate higher property values relative to income. Lenders use cap rates to assess value reasonableness and compare properties. Market cap rates vary by asset class, location, and property quality.

Question 12

How does commercial purchase financing work?

Accepted Answer

Commercial purchase financing begins with property analysis and borrower qualification. After identifying suitable lenders, we obtain term sheets outlining proposed rates, terms, and conditions. Upon acceptance, formal underwriting includes appraisal, environmental review, and legal due diligence before closing.

Question 13

How much down payment is typically required?

Accepted Answer

Conventional commercial mortgages typically require 25%–35% down payment (65%–75% LTV). CMHC-insured multi-unit financing may allow as little as 5%–15% down under MLI Select programs. The required equity depends on property type, borrower strength, and market conditions.

Question 14

What due diligence is required for commercial purchases?

Accepted Answer

Due diligence typically includes: commercial appraisal by an accredited appraiser; Phase I Environmental Site Assessment; building condition report (for older properties); zoning and compliance verification; title search and survey review; tenant estoppel certificates; and legal review of all documents.

Question 15

What is a term sheet in commercial financing?

Accepted Answer

A term sheet is a non-binding document from a lender outlining proposed loan terms: amount, rate, term, amortization, fees, prepayment provisions, and conditions. It serves as the basis for negotiations before formal commitment. We typically obtain multiple term sheets to compare options.

Question 16

What factors affect commercial closing timelines?

Accepted Answer

Closing timelines vary based on: lender type (banks may take 8–12 weeks; alternative lenders 2–4 weeks); property complexity; appraisal scheduling; environmental report requirements; tenant verification; and legal review. We coordinate all parties to minimize delays while ensuring thorough due diligence.

Question 17

When does refinancing a commercial property make sense?

Accepted Answer

Refinancing makes sense when: property value has increased significantly; interest rates have improved; you need capital for other investments; current loan is maturing; you want to consolidate debt; or property income has grown, allowing better terms. Each situation requires analysis of costs versus benefits.

Question 18

Can I refinance before my current mortgage matures?

Accepted Answer

Yes, but prepayment penalties may apply. Most commercial mortgages have prepayment provisions (closed periods, yield maintenance, or declining penalties). We analyze your current loan terms to determine if early refinancing makes financial sense after accounting for all costs.

Question 19

What is equity take-out or recapitalization?

Accepted Answer

Equity take-out refinances the property at a higher loan amount than the existing mortgage balance, providing tax-efficient capital without selling. This strategy is common for funding acquisitions, renovations, or portfolio expansion. Lenders evaluate the property's current value and income to determine available equity.

Question 20

How do lenders value commercial property for refinancing?

Accepted Answer

Lenders primarily use the income approach (capitalizing NOI at market cap rates) and may also consider comparable sales. A commercial appraisal by an accredited appraiser is required. Value depends on current income, lease terms, property condition, location, and market conditions.

Question 21

Can I transition from private lending to institutional financing?

Accepted Answer

Yes. Many borrowers use private financing for acquisition or bridge purposes, then refinance with institutional lenders once the property is stabilized. We help structure this transition, ensuring your property meets institutional underwriting requirements before pursuing permanent financing.

Question 22

What is commercial bridge financing?

Accepted Answer

Bridge financing is short-term capital (typically 6–24 months) used when permanent financing isn't immediately available. Common uses include: acquiring transitional properties, funding lease-up periods, completing renovations, or closing quickly when time is critical. Bridge loans carry higher rates but offer speed and flexibility.

Question 23

When is bridge financing appropriate?

Accepted Answer

Bridge financing suits situations where: the property needs stabilization before institutional financing; you need to close quickly to secure a deal; there's significant vacancy being addressed; renovations will increase value/income; or conventional lenders won't finance until certain conditions are met.

Question 24

What is take-out financing?

Accepted Answer

Take-out financing is the permanent loan that repays ("takes out") short-term bridge or construction financing. Lenders want to see a clear take-out strategy before approving bridge loans. This typically means demonstrating how the property will qualify for conventional financing upon stabilization.

Question 25

How important is the exit strategy for bridge financing?

Accepted Answer

Exit strategy is critical. Bridge lenders need confidence you can repay—either through sale or refinancing. Strong exit strategies include: demonstrated path to stabilization, take-out commitment from permanent lender, or sale agreement. Weak exits result in declined applications or significantly higher rates.

Question 26

Is bridge financing always short-term?

Accepted Answer

Bridge loans typically range from 6–24 months with possible extensions. Some lenders offer longer terms for complex stabilization projects. The term should align with your realistic timeline for achieving take-out conditions. We structure terms to provide adequate runway without paying for unnecessary duration.

Question 27

How does construction financing work in Ontario?

Accepted Answer

Construction financing funds the building phase of development projects. Unlike permanent mortgages, funds are disbursed in "draws" as construction progresses, verified by inspections. Interest accrues only on disbursed amounts. Upon completion, a permanent "take-out" loan repays the construction facility.

Question 28

What is a draw schedule in construction financing?

Accepted Answer

A draw schedule outlines when and how construction funds are released, typically tied to completion milestones (foundation, framing, roofing, etc.). Before each draw, an inspector verifies completed work. Lenders retain holdbacks (typically 10%) until completion and lien-free certification.

Question 29

What is loan-to-cost (LTC) in construction financing?

Accepted Answer

Loan-to-Cost (LTC) is the loan amount divided by total project costs (land, hard costs, soft costs). Construction lenders typically offer 65%–80% LTC depending on project type, sponsor experience, and pre-sales/leasing. LTC differs from LTV, which is based on completed value.

Question 30

How do inspections and holdbacks work?

Accepted Answer

Inspections verify that work claimed in draw requests is actually complete and meets specifications. Holdbacks (typically 10% of each draw) are retained until project completion and the 45-day lien period expires. These protections ensure funds are used appropriately and subcontractors are paid.

Commercial Mortgage FAQs

Commercial Mortgage Basics

Underwriting & Metrics

Commercial Purchase Financing

Commercial Refinance & Equity Take-Out

Bridge Financing

Construction & Development Financing

Multi-Unit Residential (5+ Units) & CMHC

Documentation & Closing

Explore Our Services

Commercial Purchase Financing

Commercial Refinance & Equity Strategy

Multi-Unit (5+ Units) & CMHC

Commercial Mortgage Support Across Ontario

Document Readiness Checklist

Get clarity before you commit capital.

Commercial Mortgage FAQs

Commercial Mortgage Basics

What is a commercial mortgage in Ontario?

What loan sizes do you typically handle?

Do you work across all of Ontario and Canada?

What property types do you finance?

What is the first step before applying for commercial financing?

Underwriting & Metrics

What is DSCR and why does it matter?

How is NOI calculated for commercial properties?

What is LTV in commercial financing?

How do lenders assess vacancy and expenses?

What documents support property income claims?

What is a cap rate and how does it affect financing?

Commercial Purchase Financing

How does commercial purchase financing work?

How much down payment is typically required?

What due diligence is required for commercial purchases?

What is a term sheet in commercial financing?

What factors affect commercial closing timelines?

Commercial Refinance & Equity Take-Out

When does refinancing a commercial property make sense?

Can I refinance before my current mortgage matures?

What is equity take-out or recapitalization?

How do lenders value commercial property for refinancing?

Can I transition from private lending to institutional financing?

Bridge Financing

What is commercial bridge financing?

When is bridge financing appropriate?

What is take-out financing?

How important is the exit strategy for bridge financing?

Is bridge financing always short-term?

Construction & Development Financing

How does construction financing work in Ontario?

What is a draw schedule in construction financing?

What is loan-to-cost (LTC) in construction financing?

How do inspections and holdbacks work?

When does permanent take-out financing occur?

How important is developer experience for construction loans?

Multi-Unit Residential (5+ Units) & CMHC

When is a residential property considered commercial?

Can CMHC be used for multi-unit property financing?

What is CMHC MLI Select?

What is the difference between insured and uninsured multi-unit financing?

What factors matter most for multi-unit underwriting?

Are student housing and seniors housing financed differently?

Documentation & Closing

What documents are needed to start a commercial mortgage application?

What do corporate borrowers need to provide?

What conditions are common at commercial mortgage closing?

How do appraisals and environmental reports fit into the process?

What happens after closing?

Explore Our Services

Commercial Purchase Financing

Commercial Refinance & Equity Strategy

Multi-Unit (5+ Units) & CMHC

Commercial Mortgage Support Across Ontario

Document Readiness Checklist

Get clarity before you commit capital.