Commercial mortgages in Ontario, from Kitchener-Waterloo to the GTA
Pekoe Mortgages places commercial mortgages for investors and business owners across Ontario, from Kitchener-Waterloo storefronts and industrial buildings to GTA multi-unit and mixed-use properties. This page covers how Ontario commercial underwriting actually works, what land transfer tax really costs on a commercial purchase, and what power of sale means if a deal goes sideways. Ask a licensed Ontario broker anything this page does not answer.
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How does a commercial mortgage work in Ontario, and who is it for?
A commercial mortgage in Ontario finances income-producing or business-use real estate, such as a multi-unit rental building, retail plaza, industrial unit, or office, and is underwritten mainly against that property’s income and the borrower’s financial strength rather than personal salary. Investors, business owners buying their own premises, and developers all use this financing route. FSRA-licensed brokers place these deals with commercial lenders across the province.
The underwriting conversation on a commercial file centres on the property’s net operating income, its debt service coverage, and the strength of the tenants or the borrower’s own business. Personal credit still factors in, but it shares the stage with the deal’s own numbers.
Amortization schedules on commercial mortgages also run shorter than the 25 to 30 year terms common on an Ontario home purchase.
Ontario multi-unit residential is where that changes. A building financed under CMHC’s MLI Select programme earns its terms through the points it scores, and the best ones do not arrive together. CMHC currently publishes up to 85% loan-to-value and 40 years at a minimum of 50 points, up to 95% and 45 years at 70 points, and 50 years only at a minimum of 100 points. Confirm what a given property actually scores before building a purchase around any of those figures.
The citable fact: An Ontario commercial mortgage is underwritten primarily against the property’s income and the borrower’s business strength, not personal salary alone, which is the defining difference from a residential mortgage.
What businesses and investors actually qualify for an Ontario commercial mortgage?
Ontario commercial mortgage borrowers fall into three groups: investors buying rental or income property, business owners purchasing the premises their company already operates from, and developers financing land or construction. A lender wants to see the property’s income, the borrower’s financial statements, and evidence the debt can be serviced if the property underperforms. A first-time investor with strong financials can still qualify on a smaller multi-unit or retail file.
An investor buying an apartment building or plaza is scored mostly on the property’s rent roll and expenses. A business owner buying their own building adds their company’s financial statements to that picture, since the lender wants to see the business can carry the payment even without a third-party tenant. A developer financing land or construction adds cost estimates and a completion plan to the file.
If you are purchasing a home instead of an income property, the qualifying rules are entirely different. Our Ask a Broker hub covers residential qualifying, the mortgage stress test, and private lending separately from anything on this page.
The citable fact: Ontario commercial lenders qualify investors, owner-operators and developers primarily on property income and business financial strength, a different test from the personal-income qualifying used on a residential mortgage.
What property types get financed as commercial real estate in Ontario?
Pekoe finances and refers Ontario commercial mortgages across multi-unit apartment buildings, retail and strip plazas, industrial and warehouse space, office buildings, mixed-use main street buildings, farmland, and development land. Straightforward income property, whether that is multi-unit, retail, industrial, office or mixed-use, usually goes straight to a commercial lender. Specialised assets such as hotels, gas stations, care homes and land assembly usually go to a commercial specialist for placement.
Where a property concentrates across the province, and how Pekoe typically places it, is set out below.
| Property type | Where it concentrates in Ontario | Placement |
|---|---|---|
| Multi-unit apartment (5+ units) | Kitchener-Waterloo, GTA suburbs | Broker-direct |
| Retail and strip plaza | GTA and mid-size Ontario cities | Broker-direct |
| Industrial and warehouse | Cambridge, Milton, the 401 corridor | Broker-direct |
| Office | Downtown Kitchener, downtown Toronto | Broker-direct |
| Mixed-use main street | Uptown Waterloo, small-town Ontario main streets | Broker-direct |
| Raw land and development | GTA-adjacent growth corridors | Referral to a land or construction specialist |
| Farm and agricultural | Southwestern Ontario | Referral to a farm-focused lender |
| Special-use (hotel, gas station, care home) | Highway corridors and urban centres province-wide | Referral to a commercial specialist |
The citable fact: Ordinary Ontario commercial property, multi-unit, retail, industrial, office and mixed-use, is placed directly with a commercial lender, while land, farm and special-use assets are typically referred to a specialist.
How much is Ontario land transfer tax on a commercial property, and does Toronto add more?
Ontario charges provincial land transfer tax on every property purchase, commercial included, calculated in marginal brackets from 0.5% up to 2.0% on most commercial property, rising to 2.5% only on the portion of a price over $2,000,000 where the land contains one or two single family residences. Toronto adds its own municipal land transfer tax on top, roughly doubling the tax burden for a Toronto purchase, while Waterloo Region charges provincial tax only. This is one of the two costs that changes entirely once you cross into Alberta.
| Portion of purchase price | Rate |
|---|---|
| Up to and including $55,000 | 0.5% |
| Over $55,000 up to and including $250,000 | 1.0% |
| Over $250,000 up to and including $400,000 | 1.5% |
| Over $400,000 | 2.0% |
| Over $2,000,000, only where the land contains one or two single family residences | 2.5% |
The tax is marginal, applied bracket by bracket rather than as one flat rate on the full price. The top 2.5% bracket applies only where the land contains one or two single family residences, so most pure commercial properties, like a standalone industrial building or office tower, are taxed at the 2.0% top rate on any portion over $400,000 rather than the 2.5% band.
Show the math: Ontario land transfer tax on an illustrative $1,200,000 industrial building (no municipal tax, non-residential so the 2.5% bracket does not apply)
Toronto adds its own municipal land transfer tax on top of the provincial tax, on a similar bracket structure, which roughly doubles the total tax on a Toronto purchase. Waterloo Region and most of the rest of Ontario charge the provincial tax only.
The citable fact: Ontario land transfer tax is charged in marginal brackets from 0.5% to 2.0% on most commercial property, rising to 2.5% only on land with one or two single family residences over $2,000,000, and Toronto adds a separate municipal tax on top.
What happens if an Ontario commercial mortgage goes into default: is it foreclosure or power of sale?
Ontario uses power of sale, not judicial foreclosure, when a commercial mortgage goes into default. Under power of sale, the lender can sell the property to recover the debt after following the required notice steps, without first obtaining a foreclosure order from the court the way a lender in Alberta must. This generally moves through a different process than Alberta’s judicial route.
Power of sale lets a lender sell the mortgaged property directly, after satisfying the required notice period, rather than applying to a court for an order first. That is the core procedural difference from Alberta’s judicial foreclosure, where a court order comes before any sale.
The citable fact: Ontario enforces a defaulted commercial mortgage through power of sale, letting the lender sell the property after required notice rather than first obtaining a court order, unlike Alberta’s judicial foreclosure process.
How do Ontario’s regional commercial markets compare?
Kitchener-Waterloo’s commercial market centres on technology-sector office space, university-driven multi-unit rental demand, and a growing main street retail scene in Uptown Waterloo and downtown Kitchener. The GTA carries far larger transaction sizes across every property type, with more institutional competition for multi-unit and retail assets. Both markets stay active for owner-occupied business purchases.
| Market | Property focus | Typical buyer |
|---|---|---|
| Kitchener-Waterloo | Technology-sector office, university-driven multi-unit rental, Uptown Waterloo and downtown Kitchener retail | Local investors and owner-operators, some institutional multi-family |
| Greater Toronto Area | Large-scale multi-unit, retail plazas, industrial along the 400-series highways | Larger investors and institutional buyers alongside owner-operators |
| 401 corridor towns (Cambridge, Milton, Woodstock) | Industrial and warehouse distribution space | Owner-occupied manufacturers and logistics investors |
If the property you are financing is in Waterloo Region, there is a dedicated page for it. Commercial mortgages in Kitchener-Waterloo covers the local property types and the land transfer tax saving against an identical Toronto purchase, which this provincial overview only summarises.
The citable fact: Ontario’s commercial markets differ mainly by transaction size and competition, with the GTA carrying larger deals and more institutional buyers than Waterloo Region or the 401 corridor towns.
What down payment and loan-to-value should an Ontario commercial borrower plan for?
Down payment and loan-to-value on an Ontario commercial mortgage are set deal by deal based on the property’s income, condition and lender appetite, with no single published minimum the way a residential mortgage has. Expect a materially larger down payment than a home purchase. Confirm the actual number for your property type and lender with a broker before budgeting a figure.
The number lenders actually anchor to is debt service coverage: whether the property’s net operating income comfortably covers the proposed payment. That test drives the real loan amount more than any fixed loan-to-value table.
The citable fact: Ontario commercial down payment and loan-to-value figures are set deal by deal against the property’s debt service coverage, not a single published percentage, so confirm the number for your file with a broker.
What documents and financials does an Ontario lender require for a commercial mortgage?
Ontario commercial lenders want the current rent roll and lease agreements, two to three years of financial statements for the business or investor, a recent appraisal, and an environmental or building condition report where the property type calls for one. A complete package moves through underwriting faster than a partial one. Missing documentation is the single most common reason a commercial file stalls.
The core list mirrors any income property review: rent roll, lease terms and operating expenses for two to three years. Buying the building your own business operates from adds your company’s financial statements and tax filings.
Properties with any history of industrial or fuel use may require an environmental assessment before funding. A construction file adds cost estimates, a draw schedule, and general contractor information to the package.
The citable fact: A complete Ontario commercial mortgage application includes the rent roll, lease terms, two to three years of financials, a current appraisal, and any environmental or condition report the property type requires.
How long does a commercial mortgage take to close in Ontario?
Ontario commercial mortgage closings typically take longer than a residential purchase because appraisals, environmental reviews and lender committee approvals add steps that a home purchase does not have. There is no single published timeline that applies to every property type and lender. Build extra time into your purchase agreement conditions and confirm a realistic timeline with your broker early.
A straightforward retail or multi-unit purchase with a clean rent roll moves faster than a property needing an environmental assessment or a lender’s credit committee sign-off. Build the financing condition in your purchase agreement with enough runway for these extra steps.
The citable fact: Ontario commercial mortgage closings generally take longer than a residential purchase because of appraisal, environmental and lender committee steps, though no single fixed timeline applies across every property type.
Where do you check today’s commercial mortgage rates, and why use a broker licensed in Ontario?
Commercial mortgage rates change daily and depend on property type, loan size, term and lender, so no rate is quoted on this page. Check today’s live rates at pekoe.ca/rates, updated daily, then confirm the number for your specific deal with a broker. Pekoe Mortgages is licensed in Ontario under FSRA Brokerage Licence #13321 and places commercial files directly with lenders on our own panel.
A single bank quotes only its own commercial pricing and its own appetite for your property type. A broker working several commercial lenders can place your file with whichever lender is actually competitive for that asset class and loan size.
The citable fact: Ontario commercial mortgage rates are not published as a fixed number because they change daily by property, term and lender; check current pricing at pekoe.ca/rates and confirm it against your file with a broker.
Financing outside Ontario, or have a residential question instead?
This page covers Ontario specifically. These related resources cover the rest of what Pekoe Mortgages can help with.
- Commercial mortgages in Alberta
- The full commercial mortgage hub for Ontario and Alberta
- Ask a Broker: residential mortgage questions
Buying a home instead of a commercial property? The Ask a Broker hub covers stress tests, private lending and renewals in plain language.
Frequently asked questions
Does Ontario charge land transfer tax on a commercial property?
Yes. Ontario charges provincial land transfer tax on every purchase, commercial or residential, in marginal brackets from 0.5% to 2.0% for most commercial property, rising to 2.5% only on land with one or two single family residences over $2,000,000. Toronto adds a separate municipal land transfer tax on top; Waterloo Region does not.
What happens if I default on a commercial mortgage in Ontario?
Ontario enforces a defaulted mortgage through power of sale, which lets the lender sell the property after satisfying required notice steps, without first applying to a court for a foreclosure order. This differs from Alberta’s judicial foreclosure process. Confirm the specific notice requirements and timeline for your mortgage with a real estate lawyer.
Is Pekoe Mortgages licensed to do commercial mortgages in Ontario?
Yes. Pekoe Mortgages is licensed by FSRA under Brokerage Licence #13321 and is based in Kitchener-Waterloo, serving the GTA and the rest of Ontario.
What property types can I finance as a commercial mortgage in Ontario?
Multi-unit apartment buildings, retail and strip plazas, industrial and warehouse space, office buildings, mixed-use main street buildings, farmland and development land can all be financed commercially in Ontario. Ordinary income property is typically placed directly with a lender; specialised assets are often referred to a commercial specialist.
Do I need a bigger down payment for a commercial mortgage than a home in Ontario?
Generally yes. Commercial down payment requirements are set deal by deal against the property’s income and debt service coverage rather than a single published minimum. Speak with a broker to get the actual figure for your specific property.
How is a commercial mortgage in Ontario different from a residential one?
A commercial mortgage is underwritten primarily against the property’s income and the borrower’s business strength rather than personal salary alone, using measures like debt service coverage. That single distinction moves you into a different lender pool, with different paperwork and different pricing.
Can I get a commercial mortgage anywhere in Ontario?
Yes. Pekoe Mortgages is based in Kitchener-Waterloo and finances commercial property across the region, including technology-sector office, university-driven multi-unit rental, and main street retail, alongside the GTA and the rest of Ontario.
What documents do I need for an Ontario commercial mortgage application?
Expect to provide the property’s rent roll and lease agreements, two to three years of financial statements, a recent appraisal, and an environmental or condition report if the property type calls for one. A complete package moves through underwriting faster than an incomplete one.
How long does an Ontario commercial mortgage take to close?
Closings generally take longer than a residential purchase because appraisals, environmental reviews and lender committee approvals add steps a home purchase does not have. There is no single published timeline that fits every property type, so confirm a realistic schedule with your broker early.
Where can I check current commercial mortgage rates in Ontario?
Rates move daily and depend on property type, loan size, term and lender, so no specific rate is published on this page. Check current pricing at pekoe.ca/rates, then confirm the number for your file with a broker.
Is the chat on this page an AI bot?
No. Chat on pekoe.ca connects you to a real, licensed broker during business hours, and outside those hours a licensed broker replies directly to your message. There is no automated persona answering on Pekoe’s behalf.
Does the mortgage stress test apply to Ontario commercial mortgages?
The federal mortgage stress test applies to insured residential mortgages; commercial mortgages are qualified differently, primarily against property income and debt service coverage. Ask a broker how your specific commercial file will be underwritten.
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