Commercial mortgage lenders in Canada
Commercial mortgage lenders finance property held to produce income, multi-unit residential, retail, office, industrial and mixed-use. The field includes banks, credit unions, insurance companies and pension funds, monoline and alternative commercial lenders, MICs, and private lenders, each with a different appetite for size, property type and risk.
The commercial lenders listed here describe the deals they look for. Commercial terms are negotiated per deal, so presenting the file well, and to the right lenders, changes the outcome more than it does on a house.
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Are you a lender? List here freeCommercial real estate lenders and what each is for
Banks and credit unions lend to borrowers they know on stabilised property, often with personal guarantees. Insurance companies and pension funds prefer larger, well-leased assets on long terms. Alternative commercial lenders and MICs handle transitional properties, lease-up, and borrowers who need speed. Private lenders cover the rest, at a price.
Multi-unit residential is its own category, because federal insurance programs for rental housing change the terms available on qualifying buildings. A lender that is active in insured multi-unit lending is a different call from one that is not.
How commercial lenders underwrite
The property’s net operating income and the debt service coverage ratio come first, then loan-to-value, tenant quality, lease terms and the borrower’s experience. Required coverage rises with the risk of the asset class and falls with the strength of the tenants.
Expect a commitment fee, and appraisal, environmental and legal costs that are yours whether or not the deal closes. Whether the loan is recourse or non-recourse is negotiable, and worth negotiating.
Private commercial mortgage lenders
Private and MIC commercial lending fills gaps: a property that is partly vacant, a purchase that must close quickly, a borrower rebuilding after a setback, or a project between construction and stabilised financing. Terms are short and priced on equity and exit rather than income.
As with residential private lending, fees are charged on top of the rate and should be disclosed in writing before you commit. Ask what the lender needs to see at maturity to renew, and have the exit lender identified before you sign.
Common questions
Who are the main commercial mortgage lenders in Canada?
Banks, credit unions, insurance companies and pension funds for stabilised assets; monoline and alternative commercial lenders and MICs for transitional properties; and private lenders for short-term and hard-to-place deals. Which fits depends on the asset, its income and how fast you need to close.
What do commercial lenders look at first?
The property’s net operating income and its debt service coverage ratio, then loan-to-value, the tenants and their leases, and the borrower’s experience with similar property. Personal income matters far less than on a residential mortgage.
Do I need a broker for a commercial mortgage?
Not always: established borrowers often go to their bank directly. A commercial broker is most useful when the deal is unusual, time-sensitive or large enough that institutional lenders need to be approached with a proper submission.
How do I check a commercial lender is legitimate?
Look it up with OSFI if it is a federally regulated institution, or with the provincial regulator for brokerages, administrators and credit unions. Be wary of any lender that asks for large upfront fees before issuing a commitment. Listings here are self-reported.