Canadian Commercial Mortgages
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Situation

Your mortgage matures soon and your lender has gone quiet.

You expected a renewal letter. Nothing has arrived, calls are being returned slowly, and the maturity date is getting closer. That silence usually means something specific.

Halftone illustration of a commercial building with refinancing arrows.

The situation as you experience it

The building has paid its mortgage on time for five years. You assumed renewal was a formality, the way it is on a house. Now you are inside a hundred and twenty days, the account manager has changed twice, and nobody will tell you what the offer will be or whether there will be one.

It is an uncomfortable position, and the discomfort is doing real work against you: the less time you have, the less leverage you have.

Why this happens

Commercial mortgages do not roll over. At maturity the entire balance is due and the lender makes a fresh credit decision. It re underwrites the property against the policy it has today, at the value an appraiser gives today, at today's rates. Nothing about the last five years of clean payments obliges it to continue.

So a building that fit comfortably in 2021 may not fit the same lender in 2026. Rates moved, so the coverage test bites harder. Capitalisation rates moved, so the value may be flat even though rents rose. And lenders quietly exit asset classes: a lender that liked small retail then may have no appetite for it now.

One thing worth being blunt about. A maturity default is not the same as a missed payment. A missed payment is a delinquency that can be cured by paying it. A mortgage that reaches maturity unpaid is in default on the whole balance, and that gives the lender remedies that no arrears situation does. It also makes every conversation with a new lender harder, because you are now negotiating from a position of visible distress.

What your options actually are

Renew with the incumbent. Simplest and cheapest in transaction costs. No new appraisal in many cases, no legal fees, no environmental report. The catch is that a renewal offer made to a borrower with no alternative is rarely the lender's best pricing.

Move it. At maturity there is no prepayment penalty, so this is the moment when switching is genuinely available. It costs an appraisal, legal fees and time, typically thirty to sixty days, and it usually buys both a better rate and a lender whose policy actually fits the building now.

Refinance and take equity out. If the property has gained value and the income supports a larger payment, maturity is the natural time to release equity, because the appraisal and underwriting are happening regardless. Our refinance and equity take out page covers the sizing.

Bridge it. If the timeline is already short, or the building needs a lease signed or a repair completed before it will finance conventionally, short term money buys the runway. It is expensive and it should have a written exit date, but a planned bridge is far cheaper than a maturity default.

Current benchmark pricing and typical spreads are on the BC commercial mortgage rates page.

Start six months out

This is the single most useful thing on this page. At six months you can commission a value opinion, approach three lenders, compare structures and go back to your incumbent with a real alternative in hand. The renewal offer improves for exactly that reason.

At ninety days the arithmetic reverses. There is not enough time for an appraisal, a second lender's credit process and a legal closing, and both you and your lender know it. You will probably still fund. You will fund on their terms.

And if the honest answer is that the building no longer supports the debt at current rates, six months is enough time to plan a paydown, sign a tenant or decide to sell in an orderly way. Ninety days is not.

What we would need to look at it

The maturity date and the current mortgage statement, the rent roll with the leases, and the last full year of operating statements. That is enough to size a replacement loan and tell you whether your incumbent's eventual offer is fair.

FAQ

Renewal questions.

No. Unlike most residential mortgages, a commercial loan matures and the full balance becomes due. The lender may offer a renewal, but it is a new credit decision made against today's policy and today's value, and it can be declined.

Six months before maturity. That gives time to get a value opinion, approach more than one lender and negotiate with real alternatives. At ninety days you can usually still fund, but you are taking what is offered rather than choosing.

The loan is in default at maturity even if every payment was made on time. Lenders often extend on a short term basis at a higher rate while you sort it out, but that is a courtesy rather than a right, and it can be refused.

Often yes, and maturity is the natural moment because the property is being appraised and underwritten anyway. Whether it works depends on the current value and whether the income covers the larger payment at today's rates.

Not if you move it at maturity, which is the whole advantage of planning ahead. Leaving early is a different matter and commercial prepayment penalties can be substantial, so the maturity window is the cheapest time to change lenders.
Keep reading

Related situations

Prepayment penaltiesWhat an early exit costs, and why the clause is set at commitment.Assuming a mortgageTaking over an existing loan instead of arranging a new one.Business expansion financingUsing a renewal as the moment to release capital.Fast commercial mortgageWhat is possible when maturity is close.Refinance and equity take outRestructuring rather than simply signing the offer.Have a broker read your dealSend the property and the numbers and get a straight answer. No fee, no credit check.

Maturity coming up?

Send the maturity date, the current rent roll and the existing mortgage statement. We will tell you what the market will do with this building before you have to answer your lender.

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