How to Avail Private Commercial Mortgages in Alberta

Private commercial mortgages in Alberta come in all shapes and sizes. The type of property can range from an Office Buildings & Towers, Industrial Warehouse/Office, Retail Malls and Strip Centres, Condo Construction & Multifamily Residential, Independent & Assisted Living Senior Projects, Hotels & Motels and last but not least Land Acquisitions & Land Servicing.

Private commercial mortgages can come from a wide variety of lenders including but not limited to Banks, Trusts, Credit Unions, Pension Funds, Life Companies, Private Debt and Equity Funds. In many cases private commercial mortgages in Alberta come from private individuals whose interest lie in loaning for the purpose of charging interest.

  • Interest Rates

The interest rates on private commercial mortgages can range from just over 5 to 12 percent depending on the type of property, your personal situation and net worth, how long you’ve been in business.

  • Down Payment

You can expect on a private commercial mortgage in Alberta that you will need to have at least a 25 percent down payment and in most cases most likely 35 percent. Money for down payment can come from your own resources of course but there is also allowance for second mortgages to be placed behind the original.

  • Via Second Mortgage

Another popular way for a private commercial mortgage to be placed is if the vendor holds a second mortgage for part of the purchase price. In private commercial mortgages this is know as a vendor take back and is quite an acceptable scenario provided there is equity in the property to allow for this to happen.

Guidelines for Availing Private Commercial Mortgages

When you are looking at buying a commercial property you must consider that not only will you have to have a bigger down payment than a residential property. Private commercial lenders have a set of guidelines that will include the following, 3 years of business statements, your personal net worth statements, a copy of your credit report and an appraisal on the property. The appraisal is a special type of report that a private commercial mortgage lender will review this once received but be aware that a commercial appraisal will cost in the neighbourhood of four thousand dollars.

To obtain and private commercial mortgage in Alberta you would also need to do a phase one environmental study of the property this again can cost you in the two thousand dollar range. Last but not least you will need to have a mechanical inspection of the property to get a private commercial mortgage in Alberta and that will cost in the neighbourhood of a 1000 dollars.

So over all getting a private commercial mortgage in Alberta it is not impossible but there is a lot more to it than just buying a single family home.

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