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All That You Need to Know About Commercial Mortgages


When it comes to Canada mortgage, a lot of people are only familiar with the rules and regulations related to residential mortgages. Commercial mortgages are rarely discussed, though they definitely have the perks for budding entrepreneurs and new businesses.

If you are looking for detailed information and guidelines about the mortgage rates and payment details for commercial mortgages, the following information will surely help you out! Take a look:

What are Commercial Mortgages?

Simply put, commercial mortgage is a special type of mortgage that is used as a loan for establishing a personal business. Targeted for investors and entrepreneurs, commercial mortgages are basically applied for financing official spaces, retail buildings, manufacturing plants, malls, schools or health care facilities or any other type of non-residential venture. A commercial mortgage can be used for purchasing an existing building, or for constructing it anew to establish an organization.

Similar to residential Canada mortgages, commercial mortgages are also available at a variety of mortgage rates and types to cater to the diverse needs of business owners.

Types and Variants of Commercial Mortgages

Similar to residential mortgage, following are some of the main and most popular types of commercial mortgages:

Fixed Rate Commercial Mortgage – The mortgage rate remains fixed over time, making financial planning and budgeting easier. Best to apply when rates are low.

Variable Rate Commercial Mortgage – Adjustable or variable commercial mortgage resets the interest to the current market rates at the end of each term. Though more fluctuation is expected in this type of mortgage, it is generally deemed as more affordable, and also makes the borrower eligible for more funding for their project.

Interest Only Commercial Mortgage – Those business owners who are certain that their profit levels will increase with the passage of time can qualify for an interest only mortgage. This type of Canada mortgage entitles you to a lower mortgage rate for a pre-decided period of time or the initial phase of your business.

Benefits and Advantages

Commercial mortgages come with a handful of advantages and benefits for business owners, particularly those who are in the process of setting up a new venture.

  • Investing in commercial real estate is almost always a profitable option, because higher returns and profits are expected as the value of the property and neighborhood increases.
  • The biggest advantage of going for a commercial mortgage is that you gain instant ownership of your property, as compared to renting out a building that is less secure and more costly down the road.
  • Variable commercial mortgage cuts down on your monthly costs to a large extent as the mortgage rate is low.
  • Fixed rate commercial mortgages help you plan your budget and finances accordingly as you are aware of the monthly payments in advance.
  • Commercial mortgage is mostly assumable, so that you can sell off your property easily at any point of time without worrying about breaking your mortgage and paying extra penalty.

If you are thinking about getting a commercial Canada mortgage for your business, it is best to consult a mortgage broker first so that you can explore all available options and considerations.

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