Commercial Mortgages New Brunswick – Finance Retail, Industrial, Office & Mixed-Use in NB

Common Questions About Commercial Mortgages in New Brunswick

What property types qualify for NB commercial mortgages?

In New Brunswick, lenders typically consider:

• Retail plazas, strip malls

• Light industrial or warehousing

• Office buildings

• Mixed-use (residential above commercial)

• Multi-unit residential (5+ units)

• Owner-occupied business premises

More specialized assets (e.g. hotels, nursing homes) may need niche lenders with specific experience in NB.

What LTVs do NB lenders typically accept?

For stabilized, income-producing properties in NB, expect LTVs in the 60% to 75% range. In smaller towns or for riskier asset classes, the effective LTV may be capped lower. Always model conservative leverage, especially in less-liquid NBrunswick submarkets.

What DSCR is required by NB lenders?

A DSCR of 1.20x to 1.30x is a common minimum. In cases of tenant risk or rollover concentration, underwriters may require higher DSCR thresholds or extra reserves. Use your projected NOI to test sustainability.

What rates and terms are typical in NB?

Commercial mortgage rates vary by risk, property class, and term. You might see fixed or variable rates in the 4%-8%+ zone for solid credits. Terms often span 3 to 10 years with amortization schedules of 20 to 25 years. Use the mortgage payment calculator to test payment scenarios.

How do NB submarkets and province size factor in underwriting?

Lenders compare performance in Moncton, Saint John, and Fredericton to smaller counties like Kent, Restigouche, or Charlotte. Lower transaction volume in remote areas prompts more conservative appraisals, heavier discounts, and stricter risk buffers. Present recent comps and lease trends to support your case.

Does NB offer support programs or incentives that help commercial real estate?

Yes. NB has various provincial incentive programs for development, downtown revitalization grants, brownfield redevelopment tax credits, and regional development funding. Incorporating incentive capture in your pro forma can improve lender confidence and debt service coverage.

How do appraisal and environmental assessments work in NB?

You will need a current commercial appraisal (IBC or AACI class may be accepted). A Phase I Environmental Site Assessment (ESA) is typical; a Phase II may be required if issues appear. For industrial or former gas station sites, deeper remediation and liability analysis will be baked into underwriting.

What documents should NB borrowers prepare?

Typical submissions include:

• Lease abstracts and rent roll

• T12 financial statements and operating budgets

• Property condition report, capital expenditure schedule

• Environmental reports

• Owner/guarantor credit statements, corporate financials

• Legal title documents, zoning, site plan

Ensure all municipal approvals and zoning compliance are documented.

What about tenancy structure and rollover risk in NB?

In NB, many small plazas or strip malls have mixed local tenants with shorter lease terms. Underwriters will stress test vacancy and turnover risk. Mitigate by presenting historical renewal trends, tenant diversification, and backup lease pipeline.

Are NB commercial mortgages available for owner-occupied properties?

Yes. For businesses owning real estate in NB (for example, a manufacturing plant or offices), lenders evaluate both real estate and business cash flow when underwriting. Ensure your operating entity and property ownership structure are clean and align.

Can NB transactions use floating/variable rate mortgages?

Yes, but variable rate products are riskier and often include caps or conversion options. In NB's smaller markets, lenders may price variable mortgages with a premium. Carefully model the effect of an interest rate increase via mortgage payment calculator.

How are closing costs structured in NB commercial deals?

Typical costs include legal fees, appraisal and environmental studies, title insurance, registration, due diligence costs, lender legal review, and perhaps development or permitting fees. NB does not levy a general commercial land transfer tax (as in some provinces), but local municipal fees or registration costs apply.

Can transitional or value-add properties qualify in NB?

Yes. If you plan repositioning (e.g. renovating a retail plaza or converting use), lenders may structure a bridge or construction facility rolling into a permanent mortgage. Expect lower initial LTVs, interest-only periods, and stricter oversight during renovation.

What guarantee and recourse structures are common in NB?

Smaller NB deals often include full or limited personal guarantees. Strong sponsors may push for limited-recourse with carve-outs. Liquidity covenants, DSCR floors, and replacement guarantees may be required.

How fast can a NB commercial mortgage close?

With full diligence, most NB commercial deals close in 30 to 60 days. Simpler deals may close faster. Delay risks include municipal approvals, appraisal scheduling, environmental reports, and title issues, especially in rural areas.

What happens if NB property values dip during loan tenure?

If property values decline, equity cushion shrinks. Unless default occurs, loan terms usually don't change. However, refinancing or future expansion becomes harder. To mitigate, avoid pushing leverage too high and maintain strong operating performance.

What risks do NB commercial borrowers need to watch?

Key risks include:

• Tenant turnover or low local demand

• Market liquidity in remote areas

• Operating expense escalation (heat, taxes, maintenance)

• Environmental liabilities

• Political or municipal zoning changes

Stress test cash flow for downside scenarios.

What's the first step for NB commercial real estate financing?

1. Prepare a market narrative & comparables for your property

2. Assemble financials, lease abstracts, operating statements

3. Use the mortgage payment calculator to model payments, and mortgage affordability calculator to test capacity

4. Apply for a New Brunswick commercial mortgage to receive comparable lender offers tailored to your property