Commercial Mortgage Financing in Ontario
Commercial mortgages are underwritten differently from residential. Lenders focus primarily on the property’s income-generating potential — net operating income (NOI), cap rate, and debt service coverage ratio (DSCR) — rather than the borrower’s personal income. A strong property in a solid market can carry a deal even when personal financials are complex.
Property Types We Finance
- Office buildings — single-tenant, multi-tenant, professional and medical
- Retail plazas and strip malls — anchored and unanchored, urban and suburban
- Industrial and warehouse — light industrial, flex space, logistics
- Mixed-use — commercial-residential combinations (5+ residential units)
- Multi-family residential — apartment buildings 5+ units, including CMHC-insured
- Land with commercial zoning — acquisition and construction bridge financing
How Commercial Deals Are Evaluated
The three numbers every commercial lender looks at first:
- DSCR (Debt Service Coverage Ratio) — most lenders require 1.2x minimum; stronger properties command better terms. DSCR = NOI ÷ annual debt payments
- LTV (Loan-to-Value) — typically 65–75% for conventional commercial; private lenders may go higher depending on property and market
- Cap Rate — the property’s income yield as a percentage of value, used to assess investment quality and price the risk
Beyond the numbers: location, tenancy quality, lease terms, environmental status, and property condition all factor into lender appetite. A strong tenant on a long-term lease in a primary market will always attract better terms than a vacant building in a secondary city.
Lender Options
Commercial deals are placed with the lender tier that best fits the asset and borrower profile:
- Conventional lenders (banks, life companies, credit unions) — best rates, stricter underwriting, longer timelines
- Credit unions — often more flexible on property type and borrower profile than banks
- CMHC (multi-family) — insured financing for 5+ unit residential with best-in-class rates and high LTV
- Private and bridge lenders — for time-sensitive closings, transitional assets, or deals that don’t fit conventional criteria
How Paul approaches commercial deals: Commercial mortgage brokering is relationship-driven. Paul works directly with lenders who know him, which means deals get reviewed seriously — not filtered out by an algorithm. If your deal has complexity, the answer isn’t a web form — it’s a phone call.
When Institutional Lenders Say No — Private Commercial Financing
Not every commercial deal fits a bank’s credit box. Short operating history, a property in transition, a borrower with prior credit issues, a tight closing timeline — any one of these can result in a decline from an institutional lender. That’s not the end of the deal.
Private commercial capital is available in Ontario for deals that don’t meet conventional criteria. Private lenders underwrite primarily on the property’s value, location, and equity position — not the borrower’s credit score or income history. The rates are higher, but the capital is available when institutions won’t move. Common use cases:
- Business with less than 2 years of operating history
- Prior bankruptcy, consumer proposal, or credit bruising
- Property in transitional state (repositioning, lease-up, renovation)
- Urgent closing where institutional timelines won’t work
- Deal structure that doesn’t fit standard underwriting (e.g., complex ownership, mixed zoning)
Private commercial financing is typically a bridge — used to close the deal or stabilize the property while the business or borrower profile strengthens enough to refinance into conventional terms. Paul structures the exit strategy from day one.
Under specific conditions, established Ontario business owners can purchase their operating property with zero down payment — using 100% commercial mortgage financing.
Subject to lender qualification, property appraisal, and individual approval criteria. OAC. Not all properties or borrowers will qualify. Rates and terms subject to change.
What to Prepare
To move quickly on a commercial mortgage, have the following ready:
- Current rent roll (all tenants, lease terms, monthly income)
- Last 2 years of operating statements (income and expenses)
- Property details — age, size, zoning, recent improvements
- Purchase agreement or current mortgage statement (refinance)
- Personal net worth statement and 2 years of corporate financials
- Environmental Phase 1 (if industrial or potentially contaminated)