“Ontario Hotel Financing For Existing Hotel Facilities Can Be Difficult to Secure At Times”

If you’re in need of Ontario Hotel financing, the process may be more difficult that you expected.

Hotel financing is something that is highly influenced by the economy and business activity in general as the greater the economic activity at any one time, the more people will be utilizing hotel services, especially for hotels in resort locations.

Regardless of how strong the property is in terms of valuation and repayment, many major lenders will still not be interested in considering issuing a commercial mortgage at certain points of time when they are just out of the market for these types of assets.

For the commercial mortgage lenders that are looking at hotels at any given time, the requirements for the lower cost money can be significant including but not limited to 1) the hotel carrying a major flag; 2) the hotel being tapped into a national or international reservation system; 3) the loan to value on any mortgage not to exceed 50% of appraised value; the real estate to be located in a major center with a strong and active resale market.

For hotel properties that are “unflagged”, the financing options tend to fall these days into the secondary institutional market where mortgage rates are going to be slightly higher and repayment terms a bit tighter.

Small hotel or motel units in larger centers, even those not flying under a brand name flag, can be financed by private mortgages as well. Depending on the property and the area, private mortgage rates can come very close to bank interest rates on these types of properties making a private mortgage a decent option to consider for a few years, especially during a period of economic slow down like we’ve seen over the last few years.

Even if the cost of private mortgage is slightly higher, they tend to be interest only payments. So while you won’t be reducing the principal balance during the mortgage term, the interest only payments will likely improve your cash flow if you’re refinancing, providing you with some cash flow relief until things start to turn around.

If you’re in need of Ontario hotel financing for a real estate purchase, mortgage refinance, or construction project, I suggest that you give me a call so we can review your requirements together and provide relevant mortgage options for your consideration.

Click Here To Speak With Commercial Mortgage Broker Joe Walsh

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