How to Secure the Best Commercial Mortgage Rates in Canada

Finding Your Way Through the Mortgage Maze

Securing a commercial mortgage in Canada might feel a bit like navigating a maze. Rates fluctuate, lender options are plenty, and knowing what affects those rates can seem overwhelming. But if you’re a business owner, getting the best possible rate is more than just a nice-to-have—it’s a strategic advantage that can impact your financing, cash flow, and long-term goals.

So, let’s break down some practical steps to help you find the best commercial mortgage rates without getting lost in the jargon.

1. Understand What Impacts Commercial Mortgage Rates

When lenders look at your mortgage application, they don’t just toss a number in the air; they evaluate several key factors:

• The Economic Climate: Just like the weather, mortgage rates can shift with the economy. Interest rates are closely tied to the Bank of Canada’s policies. In a high-rate environment, mortgages tend to cost more.
• Property Type and Location: Believe it or not, the type of property matters. Whether it’s retail, industrial, or office space, each comes with its own risk level, and lenders will adjust rates based on that. Location can also be a factor—some areas are simply viewed as safer investments.
• Loan Amount and Term: The bigger the loan and the longer the term, the more scrutiny you might face. Sometimes, larger loans can mean lower rates, but this varies by lender.
• Business Financials and Creditworthiness: Your business’s credit score, revenue stability, and assets play a big part in rate determination. The healthier your financials look, the lower the perceived risk, which can translate to a better rate.

2. Don’t Be Shy—Shop Around

Finding the best rate doesn’t happen by sticking with the first lender you talk to. Commercial mortgage rates vary widely, so it pays to compare.

• Traditional Banks vs. Private Lenders: Banks offer stability and lower rates, but they can be strict. Private lenders, while generally more flexible, often have higher rates.
• Mortgage Brokers: A broker can do a lot of the heavy lifting. They’ll know where to find competitive rates, compare options for you, and even negotiate on your behalf.

Looking for expert guidance? Wilson Mortgage is here to help you secure the best rates and terms tailored to your business needs.

• Credit Unions and Alternative Lenders: Smaller lenders might offer flexibility that big banks can’t, especially if you’re looking for unique terms or a customized plan.

3. Boost Your Credit Profile

A solid credit profile is one of the biggest steps you can take toward securing a good rate. Here are some areas to focus on:

• Personal and Business Credit Scores: Your personal score can impact your business loan—especially if you’re a small business. Aim to keep your credit in good standing.
• Debt-to-Income Ratio: Lenders want to see that your debt is manageable relative to your income.
• Keep Financials Clear and Consistent: When it comes time to present financials to the lender, make sure your books are in order. Good records show stability and responsibility, which lenders like to see.

4. Think About a Larger Down Payment

While it can be tempting to go with the minimum down payment, paying a bit more upfront can lower your rate.

• Lower Loan-to-Value (LTV) Ratio: A higher down payment means you’re borrowing less compared to the property’s value. This reduces the lender’s risk and can lead to a better rate.
• Financial Stability: A larger down payment signals stability. You’re essentially showing the lender that you’re committed and financially prepared.

5. Find the Right Type and Term for Your Mortgage

Choosing between a fixed and variable rate, or a short-term and long-term loan, is all about understanding your goals.

• Fixed vs. Variable Rates: A fixed rate offers stability—your rate won’t change over time. Variable rates, on the other hand, can fluctuate but might offer lower rates initially.
• Short-Term vs. Long-Term Loans: Shorter loans might come with higher monthly payments but typically have lower rates. Longer terms mean lower monthly payments but often come at a higher rate.

6. Build Relationships with Lenders and Negotiate

You don’t always have to accept a lender’s first offer. Lenders are often open to negotiation—especially if you’ve built a good relationship with them.

• Ask for Lower Fees: Look at the entire cost of the loan, not just the rate. Some fees can be negotiated down or even waived.
• Look for Rate Discounts: Some lenders offer discounts for long-time customers or well-established businesses. Ask about any ongoing promotions that could benefit you.

7. Timing is Everything

Keep an eye on market trends. Interest rates often follow predictable patterns, especially around key announcements from the Bank of Canada. When rates are low, it might be a good time to lock in, as waiting could mean missing out on a better deal.

Securing the best commercial mortgage rates can save you thousands over the life of your loan. 

If you’re looking for personalized guidance and support in Niagara or St. Catharines, Wilson Mortgage is here to help you navigate the commercial mortgage process. Contact us today and let us help you find the right solution for your business needs.