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Mixed use property mortgage by definition is a mixed residential commercial mortgage that falls under small commercial property lending -- to qualify, the property must have at least a 50% residential component. Most common examples of this category are retail stores or offices on the ground floor with apartments either in the back or above the main floor. But, there are many other configurations, each with their own set of challenges when it comes to mortgage financing.
We're Hamilton Mortgage brokers helping investors to get their mortgage for mixed use property throughout from Niagara to Toronto and beyond. We also serve Ancaster, Dundas, Waterdown, Oakville, Milton, Mississauga, GTA, Stoney Creek, Grimsby, Beamsville, St. Catherines, Dunnville and all of Ontario.
Getting a mortgage for mixed use property is a challenge demanding expertise.
Mixed use properties are unique. Depending on the area, the size of your rental portfolio, the property characteristics and your own financial strength, there are lenders who will consider store and apartment properties under their small commercial property portfolio.
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The first challenge is the amount of mortgage you can get. In most cases, lenders who provide this type of lending will consider up to 65% of property value.
It is possible to get money up to 75% for certain properties in certain areas, it’s also possible that only 50% financing can be secured.
Each property and applicant are evaluated individually, before the lender determines the mortgage amount they will lend on a particular property.
Even though these properties are mixed use by definition, they are considered commercial as well. A commercial mortgage application requires more scrutiny and review than a residential mortgage application.
This leads to the second challenge and that’s the time it takes to get the mortgage in place.
On average, funding takes 30 to 60 days to put in place. Potentially, it can take longer depending on lender requirements and the amount of verifications needed in the form of appraisals, accountant prepared financial statements, and environmental assessments.
So, make sure you allow yourself plenty of time to work through the process.
One option to get a mixed use funding done faster is using a private lenders. Depending on the property, a private mortgage lending source will have fewer requirements so the application process can be significantly reduced.
Due to the fact that institutional rates for this type of use are higher than for residential, the rates from private lenders can be fairly close to conventional banking alternatives.
While private mortgages are typically for a period of one year, occasionally lenders will provide a mortgage for a longer period.
Another challenge related to store and apartments financing, is finding a suitable lender that will fund YOUR particular and unique property.
Many banks, for example, will not consider mixed use applications under $300,000. Because their requirements are considerable, they will assess a small financing request the same as one for several million dollars, making the overall process and mortgage profitability unworkable on the smaller sized deals.
The bottom line is, regardless of where the money may come from, there is going to be a significant equity portion required by the owner.
So, are you in need of a mortgage for mixed use property or just planning ahead, give me a call so we can go over your situation together – we’ll review different financing strategies saving you time and money.
Marie Copeland, FSU Mortgage Broker
Call 905.537.8815, or
*Lenders change their products and interest rates without notice.
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