How Does A Commercial Loan Work?

Owning a commercial property in the United States is the dream of almost every Canadian citizen living in the USA. Many of them have no idea of how to obtain a commercial finance or mortgage. Certainly, purchasing a commercial property in the US presents its own challenges, if you are not a US citizen, rather a Canadian. As per a survey by the National Association of Realtors (NAR), more than half of the property transactions are done in cash in the US.

However, commercial mortgage lenders are willing to extend credit to Canadian citizens on attractive terms. Sometimes these lenders even provide credit to them without a credit history in the US. Getting a commercial mortgage depends on the residential status of the Canadian citizen. Canadian borrowers can be categorized into the below categories based on their residential status.

Non-permanent residents with a valid Work Visa (G1-G4, E1, E2, H1B, L1, H3, H2B, and H2A)
Permanent Residents with a Green Card (form 1-551)
Foreign nationals whose residence is not in the US

Paying for mortgage

If you are a Canadian citizen who wants to purchase a commercial property in the US, then be prepared to pay more for your commercial mortgage as US mortgages are compounded monthly as opposed to commercial mortgages in Canada which are computed semi-annually. In addition to this, there may also be tax deductible in the United States for its Permanent Residents. Whereas, there is no such tax deductible available for Canadian citizens interested in purchasing a commercial property in the United States by getting commercial mortgage finance.

How to apply for Canadian citizen mortgage?

Canadians can apply for a commercial loan in the US remotely via Email or phone, if they do not mind a few long distance charges. Most of the lenders and brokers strongly recommend that Canadian citizens should have a US business bank account via a ITIN (individual tax identification number) in order to facilitate the funding of finance and transfer of the down payments for the closing.

Some of the reputed lenders offer secured mortgages of up to 75% of loan-to-value (LTV) at very competitive interest rates. Canadian citizens can avail such finances in all 50 states of US. In order to attain maximum client satisfaction, such transactions are closed in 30-45 days. The closing of Canadian citizen mortgage should be done in person in the United States, preferably at the offices of the commercial loan lenders.

Documents required for processing of the mortgages?

Legible copy of valid Canadian passport
Copy of Canadian Credit History Report
Fully executed legible purchase and sale contract which is signed by all the parties Verification of funds or deposit
3 months bank statements showing that they have enough funds for a purchase
Personal Financial Statement stating Assets & Liabilities
Professional Reference Letter from CPA & Personal Banker
Bio or Resume on the Sponsor outlining previous ownership and experience managing such sizable investment
property if more than a $1M.+ investment
Real Estate Schedule of Existing Real Estate Owned In The U.S or Canada
Copy of U.S Individual Tax Identification Number
Copy of Earnest Money Deposit or Escrow Letter
Canadian Primary Residence

The final thought

Many commercial loan brokers and mortgage lending companies in the US offer commercial loans to Canadian citizens after verifying their financial track record, residency status and work history.