Mixed Use Commercial Mortgage
“Here Are The Basics For Mixed Use Commercial Mortgage Financing”
Mixed use commercial mortgage financing applies to any property is zoned and utilized for both a residential and commercial purpose.
The most common example of a mixed use property is building with a retail store and apartment units.
While these types of buildings exist in large numbers there can still be real challenges in finding and securing a mixed use mortgage.
For starters, this type of commercial property typically does not get financed above 65% of the purchase price or appraised value of the property, whichever is less. Yes, there are definitely cases where the loan to value can go as high as 75%, but there are even more situations where the loan to value is no greater than 50%.
So the equity portion required to get financing in place can be significant and a barrier to mixed use financing.
In terms of sources of financing, the chartered banks will fund mixed use property applications, but mostly at overall mortgage levels above $250,000.
From an institutional point of view, Credit Unions tend to have the ability to consider lower dollar mortgage requests for mixed use, but even then, the loan to value can still fall into the 50% to 65% range. The benefit of credit unions is their regional focus and knowledge of the local markets they serve which provides them with a greater insight into the resale market for mixed property applications from their lending area.
Trust companies also participate in this market, but on a relatively small and selective scale due to the regulatory requirements that restrict the percentage of mixed use in their overall lending portfolios.
The challenge for institutional lenders is the lack of any mortgage insurance programs for this type of financing and large risk spectrum associated with mixed use properties.
Private lenders will also provide mixed use mortgages with terms ranging from 1 to 3 years. Private rates will be higher, but in many smaller centers where traditional lenders are not interested in smaller value buildings, the private financing sources can be the best choice available.
Even when an institutional lender is prepared to entertain an mixed use application, the requirements for financing can be extensive and the application of lending criteria rather unpredictable.
This is definitely an area where a good commercial mortgage broker can add some real value to the process of locating and securing mixed use financing.
As I first step, I would recommend that you give me a call so I can quickly assess your situation and provide you with potential options that we can go over together.
Click Here To Speak Directly 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