Considering American Commercial Mortgage Options
“Does It Make Sense To Look South Of The Border For Commercial Mortgage Options?”
With the dollar staying close to par, does it make sense to consider a U.S. dollar currency funded commercial mortgage?
Why is this relevant?
Well, with all the carnage that is going on in the states, the Canadian economy is looking like a better bet for investing in commercial mortgages, at least in certain areas of the country.
So there are commercial property funding sources that are spending more time trying to get into the Canadian market.
In the past, even though Canadian business owners would consider U.S. based funded mortgages on commercial property, the close rate tended to be rather low as in the end, if they could receive a competitive offer that was close to a U.S. offering, in Canadian dollars, then the Canadian deal would be taken for fear of the currency risk driving up the cost of financing over time.
But is that as much of an issue anymore?
Sure, the dollar will continue to go up and down, but when you’re talking about a mortgage term, its usually for a three to five year period of time. With all the trauma going on in the global financial markets, its hard to forsee a significantly lower Canadian dollar any time soon.
Outside of currency, there is also the issue of availability.
There are certain segments of the commercial property market that Canadian lenders don’t have much interest in from time to time, mostly driven my the economic conditions of a sector, and partly driven by the balance of any given lender’s mortgage portfolio.
These days, a commercial deal that is just below the approval line of a Canadian lender, can be very attractive to a U.S. currency funded lender that is looking to upgrade its deal flow and diversify into the Canadian economy.
If a U.S. dollar backed commercial mortgage at a decent rate is the best option, or maybe the only option available, then its going to be given some serious considerations, despite the currency risk.
There is certainly a lot of U.S. dollar funds that would like to invest in Canada these days and that’s also not likely to change in the near term as economic reports from down south continue to worsen.
So if you’re in the market for a commercial mortgage in Canada, you may want to consider American commercial mortgage options for the reasons provided above.
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