Level Up Mortgages

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Navigating Commercial Mortgages in 2025

Commercial real estate financing has always been complex, but with today’s higher interest rates and tighter lending standards, borrowers and investors are facing both new challenges and emerging opportunities.

The State of the Market

Lenders are no longer looking only at the property itself. They’re focusing more than ever on the strength of the borrower and the long-term viability of the project. While the cost of borrowing has gone up, financing remains available for those who present a strong, well-prepared file.

What Lenders Are Prioritizing

In 2025, the main factors in underwriting decisions include:

  • Debt service coverage ratios (DSCR): Cash flow must comfortably cover debt obligations.

  • Borrower strength: A history of financial responsibility and experience in the sector.

  • Property fundamentals: Location, tenant profile, and long-term income potential.

Current Challenges

One of the biggest issues in today’s market is refinancing maturing loans. Many borrowers who secured ultra-low rates in past years are now renewing at significantly higher levels, squeezing cash flow and sometimes requiring additional equity.

At the same time, lenders have reduced their risk appetite, often demanding stronger guarantees or additional security before moving forward.

Opportunities in the Market

Despite these challenges, opportunities still exist. Well-capitalized investors can benefit from distressed sales and owners who struggle to refinance. Alternative lenders are also stepping in, offering flexible structures such as:

  • Interest-only periods

  • Blended loan-to-value financing

  • Layered debt solutions

These creative approaches are helping deals move forward even under tighter conditions.

The Role of Brokers

For brokers, this environment underscores the importance of acting as advisors rather than rate-shoppers. Success comes from:

  • Staying informed about lender appetite and product changes.

  • Submitting clean, well-documented applications.

  • Identifying potential risks before they become deal breakers.

BOTTOM LINE

Commercial mortgage financing in 2025 is a different game than just a few years ago. Higher rates and stricter lending standards are challenging, but they’re also shaping opportunities for those who are prepared, informed, and strategic. The key isn’t just finding financing—it’s structuring the right deal, with the right lender, at the right time.

Level Up Mortgages is a mortgage broker team focused on helping the self employed, new immigrants, non-residents, and investors, access best rate and alternative lending in Canada. We have been nominated for best up and coming broker in Canada in 2021 and have been on CTV News and various publications because of our education-first approach to helping you always stay a step ahead of the process. Reach out to us for access to our first-time buyer course or a mortgage strategy session.

See What You Qualify For Or Contact Paul To Get Your Pre-Approval.

  • Paul Davidescu (www.levelupmortgages.com)

  • Level Up Mortgages

  • 604-809-3188

  • paul(at)levelupmortgages.com

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September 4, 2025

Paul Davidescu