Business mortgages in Ontario, for owners who want to stop renting
Pekoe Mortgages arranges business mortgages for Ontario companies buying the premises they operate from, from a Kitchener storefront to a GTA industrial unit. This page covers how an Ontario lender underwrites an owner-occupied business purchase, what Ontario land transfer tax actually costs on a file like this, and what power of sale means if a deal goes wrong. Ask a licensed Ontario broker anything this page does not answer.
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What is a business mortgage in Ontario, and who actually uses one?
A business mortgage in Ontario finances the building an operating company occupies and runs from, as opposed to a rental property bought for third-party tenant income. An Ontario lender reads this file against the business’s own financial strength first, then the property itself. Pekoe Mortgages is licensed in Ontario under FSRA Brokerage Licence #13321 and places these files with lenders across the province.
The typical Ontario reader searching for a business mortgage is a company that currently rents its storefront, office or shop and wants to own the address instead. That is a different file from an investor shopping a plaza full of unrelated tenants, even though both sit inside the same broad commercial mortgage category.
An owner-occupied purchase in Ontario still touches the property’s condition and location, but the business’s financial statements carry the weight an outside rent roll would carry on an investment file.
The citable fact: an Ontario business mortgage finances the building an operating company occupies itself, underwritten substantially on that business’s own financial strength rather than third-party rent.
Why does an Ontario lender treat an owner-occupied purchase differently from an investment property?
An investment property purchase in Ontario comes with a rent roll the lender can read directly. An owner-occupied business purchase has no outside tenant, so the lender turns instead to the company’s own financial statements and the personal credit of its principals. The property and the business get underwritten together as one file rather than the real estate standing on its own.
| What changes | Owner-occupied business purchase | Investment property purchase |
|---|---|---|
| Primary income read | The operating business’s financial statements | The rent roll and lease agreements |
| Who occupies the building | The borrower’s own business | Unrelated third-party tenants |
| Land transfer tax | Same Ontario brackets apply either way | Same Ontario brackets apply either way |
| Personal guarantee | Close to universal from the business’s principals | Common, structure varies by lender |
Land transfer tax is one of the few costs on this list that does not change between the two scenarios. Ontario charges the same provincial brackets on a business purchase as it does on an investment purchase, which the next section covers in full.
The citable fact: an Ontario owner-occupied business purchase is underwritten on the operating company’s financial strength rather than a rent roll, though Ontario land transfer tax applies the same way to both an owner-occupied and an investment commercial purchase.
What does an Ontario lender look at when a business buys its own premises?
An Ontario lender wants two to three years of the business’s financial statements, the add-backs that reconcile reported profit to real cash flow, and the personal credit of the company’s principals. The business and the property are assessed together, since the payment depends on the company’s own operations rather than a separate tenant. A complete, organised package moves through underwriting faster than a partial one.
Add-backs matter because a smaller Ontario business’s reported profit on its financial statements rarely matches what it actually has available to service debt. Owner’s compensation, one-time costs, and non-cash items like amortization get added back to show the real number.
Personal credit still counts on top of the business review. A principal with a troubled credit history can slow a file that otherwise looks strong, since the lender is extending trust to the people behind the company as well as to its numbers.
The citable fact: an Ontario business mortgage lender reviews the company’s financial statements, its add-backs, and the personal credit of its principals as one combined file, since the business and the property are underwritten together.
Will I need to sign a personal guarantee on an Ontario business mortgage?
Almost certainly. A personal guarantee lets a lender pursue the business’s principals personally if the company cannot repay the loan, and it is close to universal on this kind of file because the borrowing entity is usually a smaller, closely held Ontario corporation. Expect to sign one even when the purchase is made entirely in the company’s name.
A corporate structure limits liability in many contexts, but an Ontario lender financing a smaller owner-operated business rarely accepts that limit on a real estate file of this size. The guarantee bridges the gap between the corporate borrower on paper and the people running it.
Our dedicated page on personal guarantees on a commercial mortgage covers exactly what signing one exposes you to, and the narrow circumstances where a lender will consider waiving it.
The citable fact: a personal guarantee is close to universal on an Ontario business mortgage because the borrowing entity is typically a smaller, closely held corporation, giving the lender recourse to its principals beyond the company itself.
Can my Ontario business buy the premises it already leases?
Yes, and this is the most common version of this search: an Ontario business tenant who wants to stop paying rent and own the building instead. A lender reviewing this file already has the strongest evidence available, your company’s actual operating history in that exact space under that exact rent. That history works in your favour during underwriting.
Buying out of a lease does not remove every unknown in the file, but it removes the biggest one: the lender can see how your business has actually performed in that location, rather than guessing how it might perform somewhere new.
Talk to your landlord early if buying is realistic. A purchase negotiated with runway before your lease comes up for renewal gives both sides more room than a deal forced by an expiring term.
The citable fact: buying the premises an Ontario business already leases is the most common business mortgage scenario, and the tenant’s own operating history in that space works in the borrower’s favour during underwriting.
What changes with a mixed-use building, a shop below and rental units above?
A mixed-use Ontario purchase, business downstairs and rented units above, blends both underwriting approaches: the lender reads your business’s own financial strength for the space you occupy, and the rent roll for the portion leased to others. This shows up often on Ontario main streets, where a storefront sits under one or two residential or commercial units. The file is more complex than a pure owner-occupied purchase because it genuinely combines both questions.
Main street buildings across Ontario, from small-town downtowns to Uptown Waterloo, commonly carry this exact shape: a business at street level with separate units above it. Your own shop’s numbers carry part of the underwriting; the upstairs leases carry the rest.
How heavily a lender weighs the two pieces against each other depends on the specific property and the specific lender, which makes this a conversation to start early with a broker rather than an assumption to carry into an offer.
The citable fact: a mixed-use Ontario purchase combines owner-occupied and investment underwriting in a single file, assessing the business’s own financial strength for the space it occupies alongside the rent roll for any portion leased to others.
How much is Ontario land transfer tax on a business mortgage purchase?
Ontario charges provincial land transfer tax on every property purchase, including a business buying its own premises, calculated in marginal brackets from 0.5% up to 2.0% on most business property. The top 2.5% bracket applies only where the land contains one or two single family residences over $2,000,000, which does not touch most business premises. Toronto adds its own municipal land transfer tax on top; every other Ontario municipality, including Kitchener-Waterloo, does not.
| 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, charged bracket by bracket rather than as one flat rate on the whole price. A business buying an ordinary storefront or office well under $2,000,000 never reaches the top bracket at all.
Show the math: Ontario land transfer tax on an illustrative $975,000 business premises purchase (these numbers are an illustration, not a quote)
A Toronto purchase at the identical price adds a separate municipal land transfer tax on top of this provincial total, which roughly doubles the tax bill. A purchase in Kitchener-Waterloo or almost anywhere else in Ontario stops at the provincial number above.
The citable fact: Ontario land transfer tax on a business premises purchase is charged in marginal brackets from 0.5% to 2.0% for most business property, and on an illustrative $975,000 purchase that totals $15,975 before any Toronto municipal tax is added.
What happens if a business defaults on its Ontario mortgage: foreclosure or power of sale?
Ontario uses power of sale, not judicial foreclosure, on a defaulted business mortgage. Power of sale lets the lender sell the property to recover the debt after following the required notice steps, without first obtaining a court order the way a lender in Alberta must. This is one of the clearest procedural differences between the two provinces.
Power of sale lets a lender move to sell the mortgaged property directly, once the required notice period has run, rather than applying to a court for permission first. That is the core procedural difference from Alberta’s judicial foreclosure route, covered on our Alberta business mortgage page.
The citable fact: Ontario enforces a defaulted business 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.
Is a business mortgage the same as a business loan, and where does SBL fit in Ontario?
No. A business mortgage is secured specifically against the real estate and finances its purchase or refinance, while a business loan is a broader category covering equipment, inventory, working capital or an acquisition. Federal programmes, including the Canada Small Business Financing Program, can apply to a business real estate purchase in Ontario, but this page states no limit, rate or eligibility threshold for any of them, because those details need to be confirmed directly rather than repeated secondhand.
| What changes | Business mortgage | Business loan |
|---|---|---|
| What it finances | The real estate the business occupies | Equipment, inventory, working capital, acquisitions |
| What secures it | The real estate itself, registered on title | Varies: equipment, receivables, a general security agreement |
| Where SBL fits | Can apply to the real estate purchase itself | Can also apply to equipment or working capital |
A business can use both at once, a business mortgage for the building and a separate business loan for the equipment or fit-out inside it. Confirm current SBL terms with a broker before building a purchase plan around any specific number you have read elsewhere.
The citable fact: a business mortgage is secured against the real estate and finances its purchase, a business loan is a broader category covering equipment and working capital, and federal programmes like the Canada Small Business Financing Program can touch the real estate purchase without a published limit stated on this page.
How do I get a business mortgage in Ontario, and where do you check rates?
Start by organising two to three years of financial statements and an add-back schedule, then talk to an Ontario broker before making an offer. Business mortgage pricing depends on the company’s financial strength, the property and lender appetite that week, so no rate is published on this page. Check today’s live rates at pekoe.ca/rates, updated daily. Pekoe Mortgages is licensed in Ontario under FSRA Brokerage Licence #13321, based in Kitchener-Waterloo and serving the GTA and the rest of the province.
A single bank’s business banking team only offers its own current appetite for your file. A broker working several lenders places your business mortgage with whichever one actually wants it this quarter.
The citable fact: getting an Ontario business mortgage starts with organised financial statements and a conversation with a broker before an offer is made; rates are not published here because they depend on the file, so check pekoe.ca/rates and confirm with a broker.
Financing in Alberta, or buying rental property instead?
This page covers Ontario business mortgages specifically. These related resources cover the rest of what Pekoe Mortgages can help with.
- Business mortgages in Alberta, including Land Titles fees and judicial foreclosure
- Business mortgages across Canada, the basics of owner-occupied underwriting
- Commercial mortgages in Ontario for investors and business owners
- Commercial mortgage financing in Kitchener-Waterloo
- Commercial mortgage term versus amortization explained
- Fixed versus floating commercial mortgage rates
Buying a home instead of a business premises? The Ask a Broker hub covers residential qualifying, stress tests and renewals separately from anything on this page.
Frequently asked questions
What is a business mortgage in Ontario?
A business mortgage finances the real estate an Ontario company occupies and operates from, such as a storefront, office or industrial unit, rather than property rented to outside tenants. The lender underwrites the company’s own financial strength alongside the property. Pekoe Mortgages is licensed in Ontario under FSRA Brokerage Licence #13321.
Does Ontario charge land transfer tax on a business mortgage purchase?
Yes. Ontario charges provincial land transfer tax on every purchase, business premises included, in marginal brackets from 0.5% to 2.0% for most business property. Toronto adds a separate municipal land transfer tax on top; Kitchener-Waterloo and most other Ontario municipalities do not.
What happens if my business defaults on an Ontario business mortgage?
Ontario enforces a defaulted mortgage through power of sale, letting the lender sell the property after satisfying required notice steps without first obtaining a court order. This differs from Alberta’s judicial foreclosure process. Confirm specific notice requirements and timelines for your mortgage with a real estate lawyer.
Can my Ontario business buy the building it currently rents?
Yes, this is the most common business mortgage scenario. A lender can see your company’s actual operating history in that exact space, which works in your favour. Talk to your landlord early if a purchase is realistic rather than waiting until your lease is close to ending.
Will I need a personal guarantee on an Ontario business mortgage?
Almost certainly, since the borrowing entity is usually a smaller, closely held Ontario corporation and the lender wants recourse beyond the company itself. Expect to sign one even if the purchase is made entirely in the company’s name. Read the dedicated page on personal guarantees before signing anything.
Is a business mortgage the same as a business loan in Ontario?
No. A business mortgage is secured against the real estate and finances its purchase or refinance. A business loan is broader and can finance equipment, inventory or working capital, secured however the lender structures it. A business can use both at the same time for different needs.
Can I get SBL financing for a business real estate purchase in Ontario?
Federal programmes, including the Canada Small Business Financing Program, can apply to a business real estate purchase in Ontario by sharing lender risk through a government guarantee. Specific limits, rates and eligibility thresholds change, so confirm current terms with a broker rather than relying on older information. Ask directly whether your purchase is a fit.
What changes if my building is mixed-use, with a rented unit above my business?
This is underwritten as a blend of both approaches: your business’s own financials for the space you occupy, and the rent roll for the portion leased to others. It is more complex than a purely owner-occupied file. Disclose the occupancy split clearly and early in the process.
Is Pekoe Mortgages licensed to arrange business 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.
Do I need a bigger down payment for a business mortgage than for a house in Ontario?
Generally yes. Down payment requirements on an owner-occupied business purchase are set deal by deal against the business’s financial strength and the property, with no single published minimum the way a residential mortgage has. Speak with a broker to get the actual figure for your file.
Where do you check current business mortgage rates in Ontario?
Rates depend on the business’s financial strength, the property, the term and the lender, so no rate is published on this page. Check today’s live rates at pekoe.ca/rates, then confirm the number for your specific 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.
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