Commercial Property Purchase Loan
In general terms, a purchase loan is a loan obtained to finance the purchase of an asset that a borrower cannot afford to acquire outright. The asset must be a tangible item such as a car, boat, cottage, home, etc. A purchase loan cannot be used for financing intangibles like an education or a vacation.
From a commercial perspective, a purchase loan is most often obtained for the purposes of upgrading or expanding the business/operations, acquiring new tangible assets or improving currently existing assets.
When to Consider a Purchase Loan
There are a number of circumstances when a purchase loan might be a good option for your business:
- To purchase and install new or used equipment
- To upgrade or modernize existing equipment
- To purchase a commercial vehicle or vehicles
- To acquire land for business expansion
- To obtain new or additional warehousing facilities
- To renovate or expand your existing premises/facilities
Short-Term versus Long-Term Purchase Loans
A mortgage term is the specified period of time (in months or years) that you can carry a loan before it must be renew or refinanced – or even paid back completely. Mortgage terms for purchase loans can be short-term (defined as 6 months to 5 years) or long-term (from 6 years to 25 years).
One major difference between short- and long-term purchase loans is in the interest rate – a short-term loan generally has a lower rate, so you will ultimately pay less for your asset with this type of loan. With a long-term loan, although your interest rate will likely be higher and your actual purchase price will be somewhat greater, your monthly repayment amount will be less than with a short-term loan – and you will also avoid the need to renew or refinance for a considerable length of time.
Who Offers Purchase Loans?
Purchase loans are available through traditional lenders (banks and financial institutions) as well as from private lenders. At Mortgage Intelligence, we have established partnerships with more than 50 lenders across Canada, including major banks, credit unions, trust and insurance companies, and other national, regional, or private lenders.
Many business owners may be unaware of the benefits of a purchase loan and/or how it may differ from other business loans or mortgages. Natasha Bridgmohan and her team of experienced mortgage brokers are here to answer your questions and find the best solution to meet the specific needs of your business.
To obtain more information on the option of a purchase loan for your business, consult the experienced professionals at Mortgage Intelligence. Call us toll-free today at 1-866-553-7467 ext 221.