Between residential and commercial options, more people have trouble securing a commercial mortgage. Buying commercial property typically takes a larger cash investment and has more moving parts. Because of these factors, most lenders in Canada are loathe to offer a commercial mortgage to somebody who does not have a very high credit score. If you find yourself in need of a mortgage but don’t have a credit score that is up to snuff, here are some ways you can improve your situation.
Take Steps to Raise Your Credit Score
For starters, it’s never too late to start increasing your credit score. If you have lapsed payments, get back on track. If you have trouble remembering when you need to make credit payments, consider enrolling in an auto-payment option that has the money automatically removed from your bank account. If your payments are too high for you to make or the interest is accruing too quickly, consider seeking a debt consolidation loan. This can get all of your unsecured debt in one place, reduce your overall interest rate, and cut down on your monthly payments as well. Getting a handle on your credit problems can be difficult at first, but the more progress you make the faster you go toward an ideal score.
Seek Out a B Lender
Fixing your credit score is an ideal solution, but it doesn’t help you much if you need a commercial mortgage right now. After all, your business endeavours can’t stop for a period of years so your credit can catch up. Fortunately, there are other options for those who need a mortgage right away. The most readily available option is to pursue a B lender. These lenders are willing to provide mortgages to those who lack perfect credit but who are trustworthy enough to take on a risk. Usually, a B lender offers a mortgage with a shorter term than the standard. This means higher payments, but you will also have the debt paid off faster than normal if you make your payments on time.
Consider Private Mortgage Solutions
Private mortgages are a more extreme version of the mortgage solutions offered by most B lenders. These involve a private company offering an interest-only loan for a very short term. The term of the mortgage might be as little as six months, or it could be up to three years. Because they come from a private company, there is less of a business risk involved. This means that people with no credit history or with a poor credit score can get a private mortgage. When you choose this option, you need to make sure that you remain aware of the expenses incurred and the payments you have to receive. The short term means that you need to pay everything off very quickly, so make sure not to borrow more than you can handle.
Above All, Don’t Panic
The biggest thing you need to remember when seeking out a commercial mortgage is that you shouldn’t panic just because your first option falls through. Fear can drive people to make potentially devastating mistakes, such as borrowing at an interest rate that you can’t afford. If you aren’t sure of what option you should pursue, talk to a mortgage professional and get some reliable advice. An experienced professional can examine your unique situation, keep your personal and business goals in mind, and then provide you with guidance as to where you should go next. Seek out a mortgage professional who has experience in the industry, demonstrated knowledge about commercial mortgages, and strong enough communication skills to put you at ease as you seek a solution.
A poor credit history is not a good thing, but it also isn’t something that needs to keep you from getting a commercial mortgage. Consider the solutions above and talk to a mortgage professional at your earliest convenience to get some guidance.