Commercial and Industrial Properties
Compared to most loan types, commercial and industrial loans have loan terms that are less strict and are easily negotiable. However, while the terms vary by bank, there are some general guidelines to consider when applying for a commercial or industrial loan.
What are you using the loan for?
The bank will assess your loan’s risk using the purpose stated on your application. Banks tend to avoid approving high-risk loans unless the borrower has a high income and is financially secure. There are also low risk and medium risk loans.
- Refinancing or purchasing commercial property is low-risk because of rental income.
- Refinancing or purchasing commercial property to use for your own business is medium-risk.
- Funding your business’ day-to-day function is high risk.
How to verify your income
The documentation banks require to verify your income is determined by the type of loan you are applying for:
- Full doc loans require all of your financial statements
- Lease doc loans require evidence your rental income is higher than the interest payments on the loan.
- Low doc loans require an accountant’s letter or your business’s financial statements
No doc loans and forecast loans are considered very high-risk by many lenders. Therefore, if you are applying for these types of loans, working with a specialty lender might be your best option.
No matter what type of commercial or industrial property you are purchasing, the mortgage brokers at Mortgage House can help you secure a competitive loan that fits your needs. Our brokers are experienced and know the ins and outs of commercial loans. We can help you improve your loan application or refinance your existing loan.