A Short Primer To Get A Canadian Commercial Mortgage In The US
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 commercial finance or a mortgage. Certainly, purchasing a commercial property in the US presents its challenges, if you are not a US citizen, but rather a Canadian. As per a survey by the National Association of Realtors (NAR), more than half of 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 a 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 lenders and brokers strongly recommend that Canadian citizens should have a US business bank account via an ITIN (individual tax identification number) 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 of such finances in all 50 states of the US. To attain maximum client satisfaction, such transactions are closed in 30-45 days. The closing of Canadian citizen mortgages should be done in person in the United States, preferably at the offices of commercial loan lenders.
Documents required for processing of the mortgages?
- Legible copy of a 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.
