Commercial Mortgage Strategy
“Here’s A Commercial Mortgage Financing Strategy To Consider With
New Property Acquisitions And
Mortgage Refinancing Scenarios”
A commercial mortgage financing strategy for acquiring a property or refinancing an existing commercial mortgage can involve both a private mortgage and a bank or institutional mortgage.
Let me explain.
If you or your business have a strong enough lending and credit profile to qualify for a bank or institutional commercial mortgage, then the only thing that might be working against you in terms of getting financing arranged and in place is time.
Bank and institutional lenders that provide commercial mortgages follow a very deliberate and methodical process to go through a request for financing, validate key sources of information, issue a commitment to fund, and fund the deal. All of this takes time which can range from 60 days on the short end to 90+ days on the long side of things.
If you’re in need of financing to close a purchase or refinance an existing mortgage, you may not have enough time to get an institutional property loan in place.
Instead of risking losing out on a good buying opportunity or incurring additional costs when a refinancing is not completed in time, another solution would be to first acquire a private mortgage against the commercial property in question.
Private lenders, on average, can make financing decisions much faster than a bank or institutional lender.
By trying to get a private mortgage in place first, you increase the probability of meeting your deadlines.
Then, once the new private mortgage is in place, you can spend as much time as is going to be required to locate and secure a bank or institutional mortgage for the long term needs of the business.
The private money serves as a bridge loan to allow you to meet the immediate needs while buying time for you to locate the best available commercial mortgage deal on the market.
Yes, a private mortgage is likely going to be a bit more expensive than a commercial mortgage from a bank. But in many cases, the difference between bank and private on commercial properties can be less than you might think.
In addition, the private mortgage is likely going to be interest only payments versus a fully amortized payment, so you will also get a cash flow advantage during the time the private money is in place.
And getting the right commercial mortgage deal when you’re not forced to take whatever you can get due to time pressure can save you a considerable amount of money over time making whatever the incremental cost of a private mortgage small by comparison.
If you’re in need of commercial mortgage financing and don’t have a lot of time, I suggest that you give me a call so we can quickly go over your requirements and review private mortgage options that may be available to you 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