Commercial Mortgages

A commercial mortgage is a loan taken by a business, usually to acquire or refinance commercial property. Unlike a residential mortgage, commercial mortgages are specifically designed to meet the unique needs of businesses. These loans are utilized for purchasing, refinancing, or renovating various commercial properties, including office buildings, retail spaces and industrial facilities.

UCU’s commercial mortgages provide financing for a wide range of properties to support your business goals. Here are some examples:

• Office Buildings: Whether you’re expanding your existing operations, consolidating locations, or building a new headquarters, UCU can help you secure the space you need with competitive commercial mortgage rates.
• Retail Spaces: Find a storefront for your business, finance a new retail development, or revitalize an existing retail location.
• Industrial Facilities & Warehouses: Our commercial mortgages can be used to finance manufacturing plants, distribution centers, or storage facilities.
• Multifamily Properties: Invest in residential income properties, such as apartment buildings or condominiums.
• Senior Housing Complexes: Meet the growing demand for senior living facilities by financing the acquisition or development of a senior housing complex.
• Hotels & Hospitality Properties: Financing for hotels, motels, or other lodging facilities.
• Churches: Secure funding for the construction or renovation of your church.

No matter your industry or property type, UCU has the expertise to help you navigate the commercial mortgage process and find the right financing solution for your business needs.

The amount you can borrow depends on factors such as your business’s financial health, the property’s value and your credit history. UCU may offer a mortgage to 65% of the property’s value.

The terms and interest rates of our commercial mortgages vary based on the property type and your business’s financial standing. UCU offers flexible terms ranging from 1 to 5 years, with an amortization period of up to 25 years. You can choose between fixed or variable commercial mortgage rates.

At UCU, a down payment is typically required for a commercial mortgage. This down payment helps demonstrate your financial commitment to the property and reduces the risk for the lender. The specific down payment percentage can vary depending on several factors, including:

• Property type: Down payment requirements may differ slightly for office buildings compared to multifamily housing developments.
• Loan-to-value ratio (LTV): This ratio compares the loan amount to the property value. A lower LTV (meaning a higher down payment) typically translates to a more favourable interest rate.
• Your business’s financial strength: Businesses with a strong credit history and healthy financials may qualify for a lower down payment.

The approval process for a commercial mortgage can vary depending on factors such as the complexity of your application and the property type. While there’s no one-size-fits-all answer, we at UCU strive to get you an answer quickly.

Yes, UCU offers commercial mortgage refinancing options. Refinancing can help you secure better terms, lower your interest rate, or access equity in your property for business purposes. Our commercial mortgage rates are competitive making refinancing an attractive option for many businesses.

We require the following:

• Up to three of the most current business year-end financial statements
• Confirmation that all CRA business taxes and HST filings are up to date and no taxes are owing
• Rent roll or lease agreements (if applicable)
• Copies of documents relating to the purchase or refinance (offer to purchase, property tax information, property details including detailed description, legal uses, environmental reports, etc.)
• Personal identification (two pieces of legal ID including one photo ID)
• Description and history of your business, cash flow projections, etc.
• Purchase agreement (if applicable) A.A.C.I. appraisal on the property you are purchasing.
• Clean environmental site assessments will be required

Yes, you can use a commercial mortgage to buy commercial property for investment purposes, such as rental income or capital appreciation. Commercial mortgages can be an excellent tool for investors looking to capitalize on the potential returns of commercial properties. Here’s how:

• Rental Income: One of the primary ways investors leverage commercial mortgages is by purchasing properties to generate rental income. Whether it’s an office building, retail space, or multifamily property, renting out commercial real estate can provide a steady stream of income to offset mortgage payments and yield profit.
• Capital Appreciation: Another benefit of using commercial mortgages for investment purposes is the potential for capital appreciation. Over time, the value of commercial properties may increase, allowing investors to sell the property at a higher price than what they paid initially. This capital appreciation can result in substantial returns on investment, making commercial properties an attractive asset class for savvy investors.
• Portfolio Diversification: Investing in commercial real estate through commercial mortgages offers investors an opportunity to diversify their investment portfolios. By spreading their investments across different asset classes, such as stocks, bonds, and real estate, investors can mitigate risk and potentially enhance overall returns.

If you miss a payment on a commercial mortgage with UCU, we will reach out to discuss the situation and work together to find a solution. Depending on the circumstances and your credit history, options may include setting up a repayment plan, deferring payments, or modifying the loan terms. Our priority is to help you in overcoming financial difficulties and maintaining your commitment to the loan. However, consistent failure to meet payment obligations could result in more serious measures, such as late fees, penalties, or, in extreme cases, foreclosure proceedings. Our ultimate goal is to ensure the financial well-being of both our borrowers and the institution, while also preserving positive relationships.

Commercial mortgages differ from residential mortgages in several key ways:

• Purpose: Commercial mortgages are tailored for business purposes, such as purchasing or refinancing commercial properties, while residential mortgages are primarily used for buying homes for personal use.
• Loan Amounts: Commercial mortgages often involve larger loan amounts than residential mortgages. This is because commercial properties tend to have higher price tags compared to residential homes.
• Loan Terms: Commercial mortgages usually come with shorter amortization periods. While residential mortgages may have amortization periods up to 30 years, commercial mortgages typically have amortization periods up to 25 years.
• Interest Rates: Interest rates for commercial mortgages are generally higher than those for residential mortgages. This is due to the increased risk associated with commercial properties and the larger loan amounts involved.

Fixed-rate commercial mortgages have a stable interest rate throughout the loan term, providing predictable monthly payments. Variable-rate mortgages, on the other hand, have an interest rate that can fluctuate based on market conditions, potentially resulting in lower initial rates but higher risk of payment increases over time.

Costs associated with obtaining a commercial mortgage may include loan origination fees, appraisal fees, legal fees, title insurance and closing costs. You should also consider ongoing expenses such as property taxes, insurance and maintenance.

When considering cash flow in relation to a commercial mortgage, it’s crucial to assess your business’s ability to cover the loan payments comfortably. You should evaluate your projected income streams, operating expenses and other financial obligations to ensure that you can sustain the mortgage payments over the long term. Also, plan for potential fluctuations in cash flow and have contingency plans in place to manage any unforeseen challenges.

Yes, it’s possible to secure multiple commercial mortgages from UCU for different properties simultaneously. Whether you’re expanding your business’s real estate portfolio or diversifying your investments, our flexible financing options can accommodate your needs. Each commercial mortgage is tailored to the specific property and business requirements, offering competitive rates and terms to support your ventures. Contact us to discuss your goals and explore the possibilities of leveraging commercial mortgages to achieve your objectives.