Most Canadians are familiar with residential mortgages. After all, homeownership is something most people aspire to, so the ins and outs of home loans and mortgage rates tend to reveal themselves to consumers as they take their first steps toward purchasing a property. However, unless an individual is a business owner or investor, they might not understand the intricacies of commercial mortgages.
What is a commercial mortgage?
Put simply, a commercial mortgage is a loan for real estate that is used for business. Whereas a person's house or condominium may require a residential mortgage, commercial mortgages are used for properties that are used for office space, retail, manufacturing and other non-residential services. Continue reading →
While Canadian mortgages have been a hot topic for quite some time, the spotlight is usually trained on the residential variety. After all, more people are buying homes for their families than purchasing buildings for businesses. But the commercial mortgage market is just as important for the economy as residential housing, if not more so. The commercial mortgage market often acts as a barometer for more than just real estate. More commercial mortgages tends to mean more jobs, which usually means higher household incomes and a healthier economy.
While the ins and outs of commercial mortgages are similar to residential mortgages, there are some key differences as well.
Qualifying When it comes to residential mortgages, qualifying for a loan falls squarely on the borrower. Income and credit history are taken into account, and if a borrower doesn’t meet a lender’s standards, the loan is denied. Commercial mortgages, on the other hand, are more about the property itself and the cash flow the property will be earning. Lenders take into account the net operating income of a property, meaning how much money it will be bringing in after payments and depreciation. They also look at the debt service coverage of a property, comparing income against the costs of principal and interest payments. Continue reading →
Whether you're dipping your toes into the mortgage pool for the first time or you're practically a professional homeowner, there are plenty of considerations and preparations that should be taken before names can be signed on the dotted line. Sufficient finances and budgets may be obvious first steps – after all, you risk foreclosure if you can't pay for your fancy new pad – but monthly payments must also be planned for in advance so the lights and water won't get turned off.
What's the point of spending all your money on a house that doesn't even have electricity and running water, anyway? Not only will you have to miss your favorite guilty-pleasure TV shows, but getting ready for work in the mornings would be an interesting experience, to say the very least.
However, one important step many potential homebuyers – inexperienced or otherwise – forget is to join forces with a few key allies. Sure, spending the time looking for the perfect connection could potentially lengthen the process of buying your dream home, but having pros on your side could save time and money – and ensure you always have running water. Continue reading →
During the second quarter of 2011, the industrial real estate market in Montreal experienced significant gains, which is important, as the sector had been one of the hardest hit during the recent recession.
A report from CB Richard Ellis revealed that Montreal's market represented more than half of the country's positive net absorption of industrial space during the year's second quarter. In all, 6 million square feet was sold through commercial mortgages or leased – 3.7 million of which were in Montreal.
"We dug ourselves out of a hole," said Brett Miller, executive vice president and regional managing director for CBRE in Eastern Canada. "We were surprised by the strength of the absorption. It surpassed our expectations." Continue reading →
Entering into a binding contract is something you probably do more than your think, and think about less than you should. Virtually any time you apply for credit or financing you are entering into a contract, the elements of which you need be cognizant of.
The Financial Consumer Agency of Canada recommends consideration of the following steps before entering into a contract:
Rumors that the Government of Canada’s Finance Department is musing the possibility of dropping the maximum amortization from 35 years to 25 years are sparking discussion among financial experts and potential mortgagers.
The year before last the government decided to cut back amortizations on high ratio loans (loans that require financing of 80 per cent or more of the mortgaged property’s value) from 40 years to 35 years. Lessening the overall time homebuyers have to pay their mortgage loan back would decrease the amount of Canadians who could potentially qualify for mortgage financing. But is it in their best interest?
Energy-Efficient Properties Eligible for Premium Discount
Amassing the 25 per cent down payment that most commercial mortgage products require for commercial properties can be difficult. But with the Canada Mortgage and Housing Corporation’s multi-unit (5+ units) insurance coverage, a commercial investor can attain up to 85 per cent financing toward their commercial purchase. This includes financing and coverage for retirement dwellings, licensed care facilities, condominium construction and student residences, new or existing, Canada-wide.
A south Ottawa community has been named as the second of six winners that will receive federal development funding toward their sustainable community development project. In a national push to raise environmental standards and encourage energy efficiency, the Canada Mortgage and Housing Corporation(CMHC) and Natural Resources Canada(NRC), under the Government of Canada’s ecoACTION program, launched its EQuilibrium Communities Initiative in June, 2009.
Equilibrium is a three-year, $4.2-million national competition that will “select projects that will work to improve community planning and develop healthy sustainable communities that are energy-efficient”.
The option to own your own home with 100 per cent financing, or even more in some cases, seems like a great deal. There is no need to accumulate the standard minimum five per cent down because that too can be financed. If the rules on qualification are stringent, including proof of solid credit rating and significant income, why are some banking professionals claiming “dismay” at the rising issue of no money down mortgage products?
For starters, some feel that the increased availability of home ownership to a pool of buyers that have not saved to put down equity into their home purchase will contribute to bubbling housing issues and inflation.
The Canadian commercial lending market continues to see change in the way it functions. In 2009 commercial lending saw a dip, which appears to be recovering this year due, in part, to a renaissance of securitization.
Though, according to the Globe Investor, Canada’s securitization market continues to see issuance levels lower than before the 1930s, issuance is improving. Foreign lenders, outside of large banks and insurance companies, are upping the commercial financing available for non-prime commercial borrowers, which means the outlook for the Canadian commercial mortgage market looks apt to see growth.
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