The Challenges With Securing Industrial Mortgage Financing

contact-joe-button4Industrial mortgage financing is required for a commercially zoned building that has an intensive or heavy manufacturing or processing purpose.

The term heavy would relate to activities like welding or some form of chemical processing where the work being performed has some impact on the building or property.  On the flip side, light manufacturing could be performed in a commercially financed building where the nature of the activity does not impact the property and structure in any manner.

With Industrial buildings, many of the challenges related to financing can stem from the heavy usage they are exposed to.

If there are higher levels of wear and tear, staining from air borne materials, or staining from liquid based materials, there can be an impact on the resale value and speed of resale, causing mortgage lenders to be less interested in these properties.

Also, if there is a toxic or corrosive type activity, the building is going to looked at more closely with respect to its containment systems and a higher degree of environmental testing is going to be involved.

Some buildings were also built for rather unique purposes, so if they are ever put up for sale, it may be difficult to find alternative uses for the building or the renovation costs to make it functional for another type of use may be too high to justify acquisition.

For some industrial mortgage applications and locations, institutional lenders will either have no interest at all in the financing opportunity, or will only provide lower levels of leverage and higher interest rates.

As a result, private mortgages can end up being the only option for certain buildings which will result in slightly higher rates than institutional lenders so the underlying business or commercial tenants will need to have sufficient margins to cover off the higher cost of financing.

The key points here are that industrial mortgage financing sources are typically harder to locate and secure than other forms of commercial financing and the time required to complete the financing process tends to run longer than virtually any other type of mortgage financing.

These are situations where a commercial mortgage broker can be invaluable to you both in terms of finding relevant sources of financing, but also helping you meet all the lender conditions and getting the deal closed.

If you required assistance with industrial mortgage financing, please give me a call and we’ll go through your options together to see if we can find a workable solution that meets your needs.

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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