Commercial Mortgage Customization
“Because Each Commercial Mortgage Is Basically A Customized Lending Solution, Substantial Time And Money Can Be Lost Thinking Otherwise”
Other than the word mortgage, there is really nothing very similar about a commercial mortgage and a residential mortgage.
A residential mortgage is placed on mass volume through customized programs that are designed to deal with large volumes of similar application requests. Success in the residential home mortgage market is based on speed and efficiency. Competition is large and margins are small, so the faster you can assess a file and either decline it or move to funding, the more likely it is that you’re making a profit.
Whether you’re talking about uninsured or an insured mortgage loan, a reverse mortgage, or a home equity line of credit, all these different types of residential mortgages are basically commodities with other similar products on the market.
With commercial mortgages its a whole different game.
While lenders can advertise very similar offerings, rates, and terms for their commercial property lending programs, the reality is that each commercial mortgage is a customized solution, basically different from any other commercial or industrial mortgage.
The reason for this is the high variability of both commercial property types and revenue streams that can be generated by one property compared to the next. The closet commercial mortgages get to residential property financing is with large multi unit residential mortgage requirements, condo financing, and other investment properties where the income is from tenants and the properties are part of a larger market for similar real estate.
For just about everything else, there is a more customized approach to non residential mortgage financing where mortgage lenders will be very selective from day to day and month to month as to what they are prepared to finance and what they are not.
Another reason for constant changes in lender approach to commercial deals is the fact that many commercial buildings can be worth substantially more than the average residential property. Having too many commercial mortgages on similar properties in similar industries can create concentration problems in the lenders portfolio, causing them to basically stop lending on certain types of properties and/or industries for periods of time.
With all this being said, its very, very, very easy to waste a ton of time AND money chasing lenders who can’t help you.
And it may not be that they don’t the type of deal you are requiring.
They may even have some in their portfolio when you apply.
But for the reasons mentioned above and potentially others, its all about what they are prepared to do at the moment of time when you apply.
That’s all that really matters.
So the key to commercial financing, if there is one above all others, would be to make sure you’re hunting with a rifle and not a shot gun, only working with relevant lenders that are in a position, today, to consider and fund your particular requirements.
Everything else is a waste of time…which can easily stretch into 6 months+ wasted.
If you’ve in need of a commercial mortgage right now, I recommend that you give me a call so we can go through your requirements together and discuss different financing strategies as well as the sources that are currently funding similar requests.
Click Here To Speak With Joe Walsh, Your Toronto Mortgage Broker
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