Commercial Mortgages in Ontario, With a Line of Credit Built In
Whether you are buying a storefront, refinancing a rental building or pulling equity out of the property your business runs from, a commercial mortgage in Ontario works differently from a home loan. Lenders look at the property's income, its leases and your business as a whole.
Our agents compare bank, alternative and private lenders to find the right fit. Through one of our lender partners, you can also pair your first mortgage with a commercial equity line of credit for ongoing access to capital. Your first consultation is free and comes with no obligation.
Apply Now Book a ConsultationProperty types we can help finance
- Mixed-useStorefront below, apartments above
- Multi-residentialRental buildings with five or more units
- Retail and plazasStandalone stores and strip plazas
- OfficeOffice buildings and office condos
- IndustrialWarehouses, shops and flex space
Line of credit available alongside a commercial first mortgage, subject to lender approval.
What Is a Commercial Mortgage?
A commercial mortgage is a loan secured by property used to run a business or earn rental income. That includes the building your company operates from, a plaza you lease to tenants, or an apartment building with five or more units.
The biggest difference from a residential mortgage is what the lender qualifies. With a home loan, the focus is your personal income. With a commercial mortgage, the property has to carry its own weight. Lenders want to see that the rent or business income it produces can comfortably cover the payments, and they value the building partly on what it earns.
For a deeper look at the lending landscape, read our guide to commercial mortgage lending in Ontario.
| Residential mortgage | Commercial mortgage | |
|---|---|---|
| What the lender qualifies | Your personal income and credit | The property's income, plus your business and personal finances |
| How the property is valued | Recent sales of similar homes | Income it produces, comparable sales and replacement cost |
| Amortization | Usually longer | Often shorter, depending on property type |
| Down payment | Can be smaller | Usually larger |
| Paperwork | Pay stubs, tax returns, ID | Leases, rent roll, business financials, property reports and a personal credit report |
Properties We Can Help You Finance
Most commercial deals we see involve smaller buildings owned by local business owners and investors. These are the property types lenders work with most often.
Mixed-use storefronts
A shop, restaurant or office on the ground floor with apartments above. The residential units give lenders a second, steady income stream to count on.
Multi-residential
Rental buildings with five or more units. Lenders generally switch from residential to commercial underwriting once a building reaches five units.
Retail and strip plazas
Standalone retail units and small plazas with several tenants. Lease length and tenant quality carry a lot of weight with lenders here.
Office buildings and condos
Professional offices, medical and dental space, and office condo units, whether you occupy the space or lease it out.
Industrial and warehouse
Warehouses, light manufacturing, contractor shops and flex space. Some lenders will ask for an environmental report on these.
Owner-occupied premises
The building your own business runs from. Lenders review your business financials alongside the property itself.
Special-use properties, such as gas stations, car washes or standalone restaurants, are reviewed case by case because fewer lenders finance them. Building from the ground up? See private construction mortgages. Financing farmland? See farm and agriculture land mortgages.
Ways to Use a Commercial Mortgage
Buy a property
Finance the purchase of a building for your business or your investment portfolio. Lining up financing before you make an offer puts you in a stronger position to negotiate.
Refinance and access equity
If your property has gone up in value or your balance has come down, refinancing can release that equity for expansion, renovations or another purchase.
Add a second mortgage
When your first mortgage has a good rate or a steep prepayment penalty, a second mortgage behind it can unlock equity without breaking the existing term. Most commercial seconds come from alternative and private lenders.
Bridge a short gap
Short-term financing can carry you through a lease-up, a renovation, or the time between buying one property and selling another, with a plan to move into long-term financing afterward.
Commercial Equity Line of Credit (CELOC)
A commercial equity line of credit, or CELOC, gives you revolving access to the equity in your commercial property. Instead of borrowing one lump sum, you draw what you need, when you need it.
How a CELOC works
Your credit limit is set when the line is approved. You draw funds as needed, pay interest only on the amount you have used, and the room frees up again as you repay. Flexible repayment options, including interest-only payments, may be available.
Why it comes with your first mortgage
The CELOC offered through our lender partner is not a standalone product. It is set up alongside a commercial first mortgage with the same lender. In practice, that works in your favour: your long-term financing and your flexible credit are arranged together, reviewed once and secured by the same property.
What owners use it for
- Working capital through slower months
- Opening a second location
- Renovating units as tenants turn over
- Repairs, upgrades and equipment
How much would you like access to?
Credit lines of up to $250,000 are available through our lender partner.
Set up alongside a commercial first mortgage. Your credit limit is subject to lender approval.
Credit limits, minimum draw amounts and repayment options are set by the lender and confirmed at approval. Already familiar with a home equity line of credit? A CELOC works in a similar way, but it is secured by commercial property instead of your home.
How Lenders Look at a Commercial Deal
Every commercial lender has its own guidelines, but most review the same five things.
Lenders compare the property's net operating income to its mortgage payments. This is the debt service coverage ratio, and it is often the biggest factor in how much you can borrow.
What the property is worth compared to what you are borrowing. More equity usually means more lenders to choose from and better terms.
Long leases with established tenants make a property easier to finance. Vacancies or month-to-month tenants usually lead to more questions.
Your business financials, personal credit and experience owning or managing property all factor in. Running your own company? Our self-employed mortgage options explain how lenders view business owners' income.
The lender orders an appraisal, and some property types also need a building condition or environmental report before funding.
Bank, Alternative or Private Lender?
Commercial financing comes from three broad sources. The right one depends on the property, your finances and your timeline.
Banks and credit unions
- Best suited to
- Stable, well-leased properties and strong borrower financials
- What they focus on
- Detailed documentation and proven property income
- The trade-off
- Lower cost, but stricter criteria and longer reviews
Alternative lenders
- Best suited to
- Good properties with a wrinkle, like self-employed income, a lease-up or an unusual building
- What they focus on
- The overall strength of the deal
- The trade-off
- More flexible than a bank, with costs that reflect the added risk
Private lenders
- Best suited to
- Short-term needs, bruised credit or deals a bank has declined
- What they focus on
- Equity in the property and a clear exit plan
- The trade-off
- Highest cost and shorter terms, with a plan to refinance out
If a bank has already said no, that is not the end of the road. Learn how private mortgages work, or see our options for a bad credit mortgage.
Documents to Have Ready
Commercial files take more paperwork than residential ones. Having these on hand helps us present your deal well from the start.
- Current rent roll and copies of all leases
- Most recent property tax bill
- Property insurance details
- Business financial statements for recent years
- Personal ID and income documents, such as Notices of Assessment
- Current mortgage statement, if refinancing
- Any recent appraisal, environmental or building condition report
- Agreement of purchase and sale, if buying
Not sure what applies to you? We will tell you exactly what your lender needs.
How It Works
Reach out
Apply online or give us a call. No lengthy paperwork to begin.
Talk it through
A mortgage agent reviews the property, your plans and your finances.
We compare lenders
We take your deal to the lenders most likely to approve it, including our CELOC lender partner where it fits.
Review your options
You see the terms side by side and decide with clear guidance.
Frequently Asked Questions
How is a commercial mortgage different from a residential mortgage?
A commercial mortgage is qualified mainly on the property's income rather than only your personal income. Lenders also review leases, occupancy and your business finances. Amortizations are often shorter, down payments are usually larger, and the paperwork is more detailed.
How much down payment do I need for a commercial property?
It depends on the property type, its income and the lender. Commercial lenders generally expect more down than on a home purchase, and special-use properties usually need the most. Once we know the property, we can tell you what lenders are likely to require.
What is DSCR and why does it matter?
DSCR stands for debt service coverage ratio. It compares a property's net operating income to its annual mortgage payments. A property that earns comfortably more than it costs to carry is easier to finance, and the ratio often decides how large a mortgage the property can support.
Does a building with five or more units count as commercial?
Generally, yes. Lenders usually treat buildings with one to four units as residential and buildings with five or more as commercial, which brings different qualifying rules and different lenders. Mixed-use buildings can fall on either side depending on how much of the space is residential.
What is a commercial equity line of credit?
A CELOC is a revolving line of credit secured by the equity in your commercial property. You draw funds as you need them and pay interest only on what you have used, much like a home equity line of credit but for business property.
Can I get a CELOC without a commercial mortgage?
Not with our lender partner. Their CELOC is only available alongside a commercial first mortgage with the same lender, so the two are arranged together. If you are buying or refinancing, that is the ideal time to set one up.
Can I get a commercial mortgage if I am self-employed or have bruised credit?
Often, yes. Alternative and private lenders put more weight on the property's equity and income than on your personal credit history. Costs are typically higher, but it can be a practical bridge until you qualify with a bank.
Can I refinance a commercial property to access equity?
Yes. If the property has gained value or you have paid down the mortgage, a refinance can release equity for expansion, renovations or another purchase. If you would rather keep your current first mortgage in place, a second mortgage may be an option instead.
Talk to Us About Your Commercial Property
Tell us about the property and what you want to do with it. We will explain your options in plain language and compare lenders on your behalf. Our agents operate under a licensed Ontario mortgage brokerage, and your consultation is free and comes with no obligation.
Apply Now Book a ConsultationPrefer to talk? Call 1-855-242-7732