Commercial Mortgage Complexities
“Getting The Right Commercial Mortgage In Place Can Take More Time And Money
That You May Expect”
A commercial mortgage is essentially a customized lending solution as no two lending requests are going to be exactly the same.
As a result, there can be a considerable amount of analysis and information verification on the part of the lender before any type of commercial mortgage commitment is extended and money advanced, and the larger the deal, the more review and verification required.
One of the keys for dealing with this potentially complex and time consuming process is to provide the borrower with the key information they are going to require from the outset and have the main third party verifications in place.
This can cost you some money up front, but can also radically increase the speed of the process with the lender.
There are pros and cons to the preparation process and we can discuss a bit further.
Many of the time consuming elements of the commercial mortgage financing process relate to the time it takes to get what I call third party verifications in place. Items like accountant prepared financial statements, appraisals, and environmental assessments are going to be required on each and every deal. If you don’t commission these items until after the commercial mortgage application has been made, the time required to complete each can add months to the process.
So on the pro side of the equation, getting the core information pieces assembled ahead of time will make the process go faster and will attract greater lender interest from the outset.
From the con side, while getting documents completed before hand will always have a value, certain things may still not be to the lenders requirements and have to be updated or re-completed by another party.
For instance, most lenders will only use AACI appraisers that are on their pre approved list, and that will provide them with an appraisal for the purposes of mortgage financing strictly for the lender’s own use for a defined period of time which typically is 60 days.
If you have gone out and gotten a commercial appraisal on the property completed ahead of time, this once again can help accelerate the process, but it may not eliminate the need to have a second appraisal completed by a pre-approved appraiser (with the same credentials) which is going to cost more money and take more time.
With respect to financial statements, any accountant prepared financial statements over 6 months old will likely need to be further supported by interim financial statements for the period of time since the last year end of the business when financial statements were prepared by the third party accountant. Sometimes a lender will accept the interim statements from the applicant’s own accounting system, but may times they will not. Further, depending on the amount of the funding request, the level of accountant review will also come into play which again can take more time to complete and cost more money.
These are only some of the things to consider before applying for a commercial mortgage.
The best approach to getting the right commercial mortgage in place in the time you have to work with is to utilize the services of an experienced commercial mortgage broker who can help you more effectively manage the complexities around your application.
Click Here To Speak With Commercial Mortgage Broker Joe Walsh
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel