I have previously defined the sub prime commercial mortgage space as an area of the market that is just below the qualifying requirements of “A” lenders.
One of the challenges of securing a sub prime mortgage is finding rates and terms that are acceptable to the borrower.
Borrowers that have this type of deal, have a hard time believing that they can secure an “A” mortgage rate, so they persist in earnest trying to get financing that is just not available to them.
When sub prime options are explored, and because there is always more demand than supply, lenders tend to try and charge more due to limited available funds.
So there can be quite a gap between the “A” rates that you can almost qualify for and the “B” rates that are available to you.
In most cases, a subprime mortgage is short term property financing facility that will provide the capital necessary to move forward and provide the time necessary to work into cheaper money.
So in the end, sub prime rates are never going to be optimal, but they do allow financing to take place.
The challenge is finding a subprime interest rate that is acceptable to you and can be “cash flowed” somehow until cheaper money can be made available.
But unlike most “A” lenders, subprime lending sources tend to work through brokers, which means that the access to them can be harder to come by.
Even if you end up working with a mortgage broker that works in this part of the market, there is certainly no guarantee that they can place your deal as there can be great divergence among the financing programs offered by the secondary market.
So selecting a broker to work with that has broad access to what we can also call the alternative commercial property mortgage market is going to be important.
Even more helpful still is being able to provide a solid and complete lending package to a broker for review so they can more quickly determine if they are in a position to provide financing assistance to you.
Precious time can be lost trying to understand the deal and putting in applications to lenders that are not highly relevant.
In the end, getting an acceptable subprime commercial mortgage rate is going to start with understanding the rate you can afford versus focusing on a certain rate range you feel justified in asking for. From there, its all about working with the right professionals that can not only lead you to subprime commercial money, but also to a deal structure that can work in your budget.
And focusing on sub prime options sooner than later will provide a greater probability of getting a reasonable rate versus spending a larger chunk of your available time pursuing an unlikely “A” credit solution, and then be left scrambling to try to secure a subprime commercial mortgage with time running out on your deal or requirements.
If you are exploring subprime commercial mortgage options, I would welcome the opportunity to go over your situation and see if we have any potential solutions for you.
Click Here To Speak With Toronto Mortgage Broker Joe Walsh For A Free Subprime Commercial Mortgage Assessment
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