Subprime Commercial Mortgage Options
“Subprime Commercial Mortgage Options Are On The Rise”
While we have seen a nice recovery by the subprime residential market since the financing downturn in 2007/2008, the same cannot be said for the sub prime commercial mortgage market.
That being said, there are more and more active sources moving into this part of the market, but the movement is slow and rather cautious as individuals and merchant banks try to get a better feel as to what they are comfortable with.
To be clear, when I speak of sub prime commercial lending, this is basically commercial property financing deals that do not qualify for bank or main line institutional lending, but still have a strong enough basis to attract funding that will look at slightly higher risk levels.
While private lenders can also be thrown into the subprime space, the majority of money that is hardest to come by is for deals over $1,000,000 and over several million dollars.
Once you get into this level of commercial financing, there are not a lot of individual private lenders or lender groups that are interested in putting a large amount of their overall investment portfolio into one or two deals.
So the ongoing demand is for commercial lending that can fund the $1,000,000 to $20,000,000 deal for a one to three year period.
And while the major bank’s are getting more aggressive with their lending and funding criteria, there are still a lot of pretty good looking deals that do not make bank grade which are continually looking for money.
The this “middle” market zone, we are talking about deals for a quick purchase, mortgage refinancing, debt consolidation, equity take out, or a building/renovation project.
The goal of the borrower is to get access to capital quickly to take advantage of an opportunity, cover a capital requirement, or buy time until lower cost, long term financing can be arranged.
This area of sub prime lending is attracting more and more investors into the market where the lenders range from individuals to large financial entities that want to diversity into real estate financing.
The rates and terms can be similar to private mortgages with the biggest difference being loan size and broader acceptance of potential exit strategies.
In Canada, the Ontario market is primarily sought after due to its size and market stability. But most of the other provinces are getting interest as well for these types of opportunities.
Serious lenders can usually assess a deal in a week or so and fund within 30 days provided everything required for funding is in order.
This is always going to be more money available in the larger centers, but out lining areas are seeing more interest as well albeit with some amount of premium attached.
If you’re looking for a short term commercial mortgage or bridge loan for one or more of the reasons mentioned about, then I suggest that you give me a call at 416 464 4113 so we can go over your requirements together and discuss different subprime commercial options that may be available to you.
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