Commercial Mortgage Rates
“Commercial Mortgage Rates Can Come In A Wide Range”
Commercial mortgage rates can be more than a bit difficult to understand at times.
If you qualify for the posted institutional “A” lending rates, you’ll find that even though commercial mortgage rates have gone up slightly in the last year, they are still set at record lows across rate terms.
For the businesses and individuals that qualify for the top end rates, the cost of capital is very good these days with terms of 5 years coming in under 4.5% from some lenders.
But once again, this is for those that qualify for cheaper money, which is far from an automatic occurrence.
Strong cash flow from strong real estate in strong markets equals lower cost of capital.
For anything outside of that description, the cost of capital is going to be higher.
While that’s hardly the end of the world, there can be a considerable range in interest rates for properties that do not automatically fall into the premium “A” credit range.
Obviously the more competition there is for any type of commercial mortgage application, the better the available rates will be in any market category.
And higher end competition will advertise their rates and work to gain the business.
Where commercial mortgage rates really start to vary across a range is when there is less competition for the business, where commercial mortgage lenders are interested in the opportunity, but are selective in terms of the amount of funding they place in any particular segment and at the rate they can place the funds.
Commercial mortgage financing can be very much a game of timing when you can’t fall into the deep pockets of the large banks or institutional lenders.
If you have good cash flow and a solid property, there is likely a decent commercial mortgage rate out there, but the challenge is finding and getting in place in the time you have to work with.
The commercial mortgage market, especially in larger centers where there are more commercial property assets, will have a constantly changing market dynamic where mortgage lenders will come in and out of the market, and where long time commercial mortgage lenders will pull in and out of certain markets according to the weighting of their portfolio.
Sources of money for commercial lenders can also dictate the costs of money for certain types of properties at different period of time along with money supply. In the end, lower rates don’t do you any good if the lender doesn’t have the funds available, or isn’t prepared to commit funds towards a commercial mortgage for your property or project.
Primarily because of time pressures, many business owners and property owners can end up securing a financing rate that is higher than what is available to them. When time is limited, its going to be important to understand where the market is at and which lenders are going to be the most interested and most aggressive towards any particular opportunity.
Focusing in on the wrong lender may get you funded, but perhaps at the higher end of the commercial mortgage rate range for your property.
The best way to increase your probability of getting a good commercial mortgage rate out of the market at any given point in time is to work with a commercial mortgage broker who can get you working with a commercial mortgage lender capable of meeting your requirements and providing a very competitive offer.
If you’re finding it difficult to qualify for the posted “A” commercial mortgage rates and want to better understand the next available options, I suggest that you give me a call so we can go over your situation together and review different commercial mortgage rate options available in the market.
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