Here’s a story about how hard it’s become to secure commercial mortgages, versus 2 to 3 years ago. (See Lender Loyalty by Orillia Today)
In it, Chris Doughty, of Dominion Lending Centre, offers a few sage tidbits; namely:
Don’t make idle threats…
- Doughty says: “You don’t want to try to bully the bank into giving you a better rate because it might backfire on you. It might have worked two or three years ago, but it doesn’t work today.”
Don’t get impatient…
- “Sometimes customers are their own worst enemies,” says Doughty. “People get impatient and get other brokers involved. Then all these brokers are shopping the same deal – eventually the deal runs into itself. Lenders think it’s credit seeking and wonder what’s wrong with the deal – and then no one will want to touch it.
Depending on the deal, it can take up to 10-30 days or more to find a commercial lender who can provide a suitable letter of interest (LOI). Then, the full due diligence stage begins, which takes even more time.
Make sure you factor in that timeframe and make sure you find a commercial mortgage specialist. Commercial financing is a whole different animal. Residential mortgage brokers generally don’t have the experience, skills and contacts needed to efficiently service commercial clients.
I will 2nd that point about using brokers who specialize in commercial financing. Using a regular broker is like using a Chrysler mechanic work on your BMW. You don’t want a broker ‘learning the ropes’ at your expense.
Wow, he has 5 years a s a planner,,,impresssive,,,
I think most of us in the industry know brokers that have been in business 10-15 years, that know less than hard working brokers in business for 5!
As a purchaser of property, I was pleasantly surprised in November 09 as I expected less interest from lenders than there really was for a commercial property financing. Some were less interested of course but I was able to obtain several good proposals. I am not a broker and did not use a broker, but I see positive signs that there is more interest out there than say 1 year ago at this time. You have to be patient I agree.
I think you’re right for now Ninvic. On the other hand there are billions in commercial mortgages coming due that were funded with commercial MBS. That market is now wiped out. Time will tell if the market can absorb these renewals or if commercial money will once again become scarce.
There is a ton of funds out there for 50% LTV deals with lots of cash flow and net worth behind them. In other words, for people who don’t “need” the money.
Great article on mortage rates and all. This will no doubt be helpful to many.