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Commercial strata units + commercial properties, why such a high down payment?

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#21 MarkoJ

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Posted 24 July 2012 - 03:04 PM

I specialize in residential; however, from time to time I dabble in a bit of commercial.

Downpayment required is typically 35% from my experience, and the interest rate is around 5% or so (versus low 3% for residental)....for qualification lenders look at a lot of different factors on the property. Cap rate, terms of lease, is the buyer a landlord or will the buyer be running a business out of the property? etc., etc.

It really goes on a case by case basis. As Bob pointed out, commercial mortgage fees are pretty damn high. My old man is builder and when he needs to get commerical loans it is a pain.

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#22 pherthyl

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Posted 24 July 2012 - 03:22 PM

Yeah, I'm not entirely certain, to be honest - it changes based on who you talk to at what bank. I know that when I was in a position to put down multiple 5% down payments, I was told that for investment properties it needed to be 35%, unless I already owned three.

Interesting. Looks like the lenders are being much more cautious these days. Had some colleagues that bought rental condos with 5% down years ago, CMHC insured. I guess they cracked down hard on rental condo lending.


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