Experienced Commercial Mortgage Underwriter

Unlike residential properties (1-4 units), multifamily (5+ units) provides investors with a unique opportunity to force appreciation/increase value by actively improving the net operating income (whether through rent increases or expense reductions). Risk is also reduced with a greater number of units, compared to a single-family property when there is a vacancy. A multifamily property offers economies of scale, as the cost of maintaining and managing a multifamily property is lower than the cost of maintaining and managing a single-family property. Commercial mortgages are underwritten to minimize the risk of default.

With commercial financing, it is important to have access to multiple lenders as each lender will have its own underwriting guidelines, and not all lenders are one-size-fits-all. It will serve you to know which lender is most suitable for your current needs and how to position your file with the lender to secure the best possible terms. I am committed to ensuring you have a solid understanding of the debt service coverage analysis, commercial financing process, and borrowing costs associated with a commercial mortgage. I will be advising you every step of the way, preparing you for what’s to come.

Unlike residential properties (1-4 units) where mortgages are underwritten based on the borrower’s total debt service ratio and gross debt service ratio, commercial mortgages (5+ units) are based on the property’s net operating income. Commercial lenders use the debt service coverage ratio to determine the loan amount the property can support. Each lender has its own unique underwriting guidelines, expense benchmarks, and debt service requirements. Although each property is unique, I can equip you with the knowledge and tools on how to run these numbers yourself for CMHC-insured, conventional, or alternative financing.

Commercial lenders typically do not pay a commission to mortgage agents/brokers, therefore a broker fee is charged upon successful completion of a mortgage transaction. Broker fees are typically a negotiable percentage of the loan size, and priced based on the size of the loan and complexity of the file. The broker fee is quoted upfront and upon receipt of a letter of interest from a lender. The broker fee is deducted from the loan advance by the borrower’s lawyer on the closing date.

Once a financing plan is laid out, the file is prepared for lender review. If a lender is interested in reviewing the file, they will issue a letter of interest with a list of documents required to underwrite the deal and perform due diligence. The letter of interest may quote target terms including loan amount, rate, and lender fees. The credit department will review, and if the file is approved, the lender will issue a commitment letter or credit agreement. This agreement will offer the rate, loan amount, fees, and terms based on the lender’s risk assessment.

Just use the “Contact Hanna” button below. You can email me, text me, or pick up the phone and give me a call. Let’s have a quick chat about your goals, current portfolio, investment experience, or upcoming project.