Commercial mortgages in British Columbia, explained.
Last updated September 2026
What a commercial mortgage is, how lenders decide the amount, what qualifying takes, what it costs and how long it runs. Written for someone working it out for the first time, using the way files actually get done in this province.
The short answer
A commercial mortgage in British Columbia typically runs a 5 year term on a 25 year amortization, needs 25 to 35 percent down, and takes 45 to 90 days conventionally, with any residential building of five or more units treated as commercial.
| Path | Timeline | What drives it |
|---|---|---|
| Conventional | 45 to 90 days | Term sheet, then the appraisal and environmental reports, then credit, then legal |
| Insured multifamily | Three to five months | The insurer review runs on top of the lender's own process |
| Private or bridge | One to two weeks | Speed is the product, and the pricing reflects it |
What a commercial mortgage actually is
A commercial mortgage is a loan secured against property held for business or for income, rather than against a place you live. The distinction is about the use of the building, not the size of the loan. A duplex you rent out is still financed as residential. A ten unit apartment block is not.
The line on residential property sits at five units. Four and under is underwritten like a house, with your personal income carrying the debt. Five and up moves to commercial underwriting, where the building has to carry itself. Everything that is not residential is commercial by default: industrial and warehouse space, retail and main street plazas, offices, mixed use buildings, hotels and motels, self storage, gas stations, land, and buildings a business buys to occupy itself.
There is also a practical floor. Commercial files carry fixed costs that do not shrink with the loan: an appraisal, often an environmental report, lender legal, and the underwriting time behind all of it. In British Columbia that means most deals start around one million. Smaller files can be done, but the cost of getting them done is rarely worth it to the borrower, and we will usually say so.
How it differs from a residential mortgage
This is the section most people need, because the assumptions carried over from buying a house are the ones that cause trouble later.
It is underwritten on the property. A residential lender starts with your salary. A commercial lender starts with the building's net operating income, which is the rent it collects less the cost of running it. Your income, net worth and history still matter, but they support the file rather than drive it. A strong borrower cannot make a weak building work, and a strong building forgives a lot about the borrower.
The term is short and the amortization is long. A typical commercial mortgage runs a five year term against a 25 year amortization. That means a substantial balance is still outstanding when the term ends. Every commercial mortgage is really a series of refinancings, and the plan for the maturity is part of the deal, not an afterthought.
Nothing renews automatically. No renewal letter arrives in the mail with a rate on it. At maturity the lender re underwrites the property and the borrower against today's rents, today's values and today's policy, and it can decline. A perfect payment record is not a renewal. That is why commercial renewals should start roughly six months out.
Personal guarantees are normal. The borrower is usually a holding company, and the lender wants the people behind it personally liable. Read what the guarantee covers, and for how long, because that clause outlives the interest rate you spent all your energy negotiating.
You pay for the reports. An appraisal the lender can rely on, usually an environmental Phase 1, sometimes a building condition assessment or a cost consultant. These are ordered by the lender, paid by the borrower, and they are spent whether or not the deal closes.
Rates are quoted per file. There is no posted commercial rate. Pricing comes back after an underwriter has looked at the asset, the tenants, the leverage and the covenant, which is why a quote given before anyone has seen the rent roll is a guess.
How lenders size the loan
Two tests run in parallel, and the smaller answer wins.
The first is debt service coverage. Take the property's net operating income and divide it by the annual mortgage payments. Conventional lenders want that number at about 1.20 to 1.25, so the building throws off a 20 to 25 percent cushion over the debt. Weak tenants, short leases or a thin market push the requirement higher. Working backwards from the coverage requirement gives you a loan amount, and that amount has nothing to do with what you agreed to pay for the building.
The second is loan to value, capped by asset type. Multifamily gets the most room, industrial and stabilised retail somewhat less, special purpose assets least of all. Value here means the appraised value, which on income property is derived from the income rather than from the price you negotiated.
When coverage allows 6.4 million and the leverage cap allows 6.8 million, the loan is 6.4 million and the gap is equity. Most surprises late in a deal are a version of that arithmetic arriving later than it should have. The DSCR guide walks the full calculation, and the commercial mortgage calculator runs it on your own numbers in under a minute.
What you need to qualify
Down payment first, because it decides whether there is a deal at all. Conventional purchases generally need 25 to 35 percent, with stabilised multifamily at the friendly end and hotels, gas stations and single tenant special purpose buildings at the other. Insured multifamily can go well beyond conventional leverage on qualifying purpose built rental. The down payment page breaks the ranges out by asset type.
Then coverage. The building has to clear the lender's minimum on its actual income, not on a pro forma that assumes rents you have not achieved. Lenders will normalise your numbers: vacancy allowance, management fee, a structural reserve. Expect the underwriter's net operating income to come in below yours.
Then the covenant. A common rule of thumb is net worth at least equal to the loan amount, with liquidity around 10 percent of the loan still available after closing. Experience matters on anything that is not already stabilised: on construction and value add files the sponsor's track record is often the deciding factor. And then the third party reports, which are conditions of approval rather than optional extras. The full list lives on commercial mortgage requirements in BC.
The types of lender in British Columbia
Chartered banks. The cheapest money and the narrowest box. Best on clean, stabilised, well tenanted property with a strong borrower behind it. Slower on anything unusual, and a decline is often a policy decision rather than a judgment about your building.
Credit unions. Frequently more flexible on commercial than the banks are, which surprises people. They know local submarkets, they will look at a file the bank's model rejected, and they price close behind. In this province they fund a large share of small and mid sized commercial deals.
Insured executions. On purpose built rental, an approved lender can place the mortgage with mortgage insurance behind it, which unlocks higher leverage, longer amortization and sharper pricing than anything conventional. The trade is process: more documentation and a materially longer timeline. See MLI Select financing.
Alternative lenders. Mortgage investment corporations and non bank lenders who underwrite the asset and the story rather than a policy grid. Costs more than a credit union, moves faster, and is usually a bridge to something cheaper rather than a permanent home.
Private capital. The most expensive money and the quickest. It buys time: a closing you have to make, a repositioning to finish, an arrears problem to clear. Priced accordingly, with a fee on the way in, and it only makes sense when the exit is real and dated. See private and second mortgages.
Cost rises as you move down that list. So does speed and flexibility. The skill is taking the cheapest execution your file can actually hold, rather than the cheapest one you can imagine.
Property types financed
Multifamily is the deepest market in the province. Five units and up, priced off the rent roll, and the asset class lenders compete hardest for. Construction funds by draw against work in place, sized on cost to complete and the finished value, with the sponsor's record doing most of the talking.
Industrial benefits from very low vacancy across the Lower Mainland, though a Phase 1 is close to automatic. Retail turns on tenant covenant and lease term more than on the building. Mixed use gets split underwriting, with the residential and commercial portions treated differently by the same lender.
Hotels and motels are operating businesses with real estate attached, underwritten on occupancy and daily rate. Self storage turns on unit mix, occupancy and competition inside the catchment. Gas stations live or die on the environmental report. Land produces no income at all, so it is financed on value, servicing status and the borrower's plan for it.
What it costs
Commercial pricing is a benchmark plus a spread. The benchmark is usually a Government of Canada bond of matching term, or the lender's own cost of funds. The spread is where the file gets judged: asset class, leverage, lease term, tenant quality, market depth and sponsor strength all move it. Two identical buildings with different tenants price differently, and that is the whole game. Current benchmarks and typical spreads are on the BC commercial mortgage rates page.
Then the costs people forget when they compare quotes. An appraisal on income property, which is a real piece of work and priced like one. An environmental Phase 1 on most industrial, automotive and older commercial sites, with a Phase 2 if the first one finds something. Legal on both sides, since you pay the lender's counsel as well as your own. A lender fee on most non bank executions, sometimes on bank deals too. And on insured multifamily, the mortgage insurance premium, which is significant, usually added to the loan, and paid back for the value it unlocks in leverage and amortization.
Compare offers on the total cost of the money over the term you will actually hold it, not on the rate alone. A lower rate with a higher fee and a shorter amortization is frequently the worse deal.
How long it takes
A conventional commercial mortgage in British Columbia typically runs 45 to 90 days from a complete application to funding. An insured multifamily execution runs three to five months, because the insurer's review sits on top of the lender's. Private and bridge financing can fund in one to two weeks where the security is clean and the exit is obvious.
Most delay is not underwriting. It is a document that arrived late, a rent roll that did not reconcile to the leases, or an appraisal ordered two weeks after it could have been. The stage by stage breakdown is on how long a commercial mortgage takes, and the deal submission checklist is what removes most of it.
Where people usually get stuck
Most people do not arrive looking for a product. They arrive with a problem. The four we hear most often are a bank that said no, income that does not show on a tax return, a maturity with a quiet lender, and a closing date that will not move. Each of those has a normal path through it, and each has a version where the honest answer is to wait. The full set is on the financing situations hub.
Do you need a broker
Honestly, not always. If you have a long standing relationship with a commercial account manager at your own institution, and the deal is a straightforward purchase or refinance of stabilised property that fits comfortably inside their box, going direct is a perfectly good answer. You will get competitive pricing and you will not need anyone to translate anything.
What a broker does is package the file so an underwriter can approve it, then take it to the lenders whose current appetite matches the asset. That appetite changes constantly and is not published anywhere. The work is knowing which lender is writing industrial this quarter, which credit union will look past a short lease, which one will not touch a site with fuel history, and what each will need before they say yes.
So the market matters when the file is anything other than routine: an unusual asset, a tight timeline, a decline you want a second read on, leverage above what one lender will do, or a first commercial deal where you do not yet know what normal looks like. If your situation is the simple one, we will tell you to call your bank. That answer costs us a deal and it is still the right answer. How we work is set out on our process and why CCM.
Commercial mortgage questions, answered.
Go deeper on the part that matters to you.
Have a property in mind?
Send us the address and the numbers. A senior broker will tell you what it borrows, what it likely costs and whether we are the right people for it, within one business day.