Private Mortgage for Special Purpose Properties

What You Need To Know

A special-purpose property is a property that is used for a particular purpose, such as a church, a school, a museum, a gas station, a nursing home, a daycare centre, etc. A special-purpose property may need to be rezoned to allow the intended use if it’s not already identified as permitted in the by-law.

Private mortgage lenders typically lend up to 85% of the appraised value on a special-purpose property. They would ask for the financial projections to assess the borrower’s exit strategy before funding.

At Canadian Private Mortgage, our clients know that we won’t steer them into products or financial terms that don’t fit their investment goals.

Our private mortgage for special-purpose properties is ideal for real estate investors who understand the benefits of income-generating properties and are not afraid to ask questions about what’s best for them.

Private mortgages for special-purpose properties are ideal for borrowers who already understand how to calculate the financial projection of a special-purpose property.

Private mortgage lenders will look at the income-generating potential to be convinced about why it’s a good financial move to fund these properties. The numbers have to make sense for both the borrowers and the private lenders.

Creative Financing For Special Purpose Properties

Alternative to Traditional Mortgages

One of the few advantages of private mortgage lending for special purpose properties is its flexibility. For example, borrowers can opt for interest-only payments for the mortgage term, as long as they can afford the monthly payments and have a sensible exit strategy at the end of the term.

Private lenders who have experienced funding a special-purpose property can become valuable advisors to the borrowers with their experience in evaluating the property income projection. Such insight protects borrowers from avoidable risks that could lead to financial loss.

Financing Options for Commercial Properties

The process of obtaining financing for commercial properties with a private mortgage is much simpler than the process for traditional lenders. Although private lenders will still ask to verify some information to satisfy their internal lending guidelines, in general, it may actually be faster and easier.

Private lenders assess a mortgage loan application based on the allowable use according to the city by-law and its location in the neighbourhood. A property appraisal is certainly a requirement that borrowers will need to satisfy as part of the refinancing process.

Generally speaking, private lenders will allow higher loan-to-value (LTV) than traditional banks and lenders. 

Private Mortgage Lending For Gas Station Locations

One of the most important parts of the mortgage process for financing a gas station is finding an experienced lender.

Lenders should have experience in the petroleum retail industry and speak the language of the customer. This means they should understand the expected cash flow projects in the best and worst case scenarios and what margin trends are popular amongst gas station owners. Finding an experienced private lender may be a longer one than you might imagine, but it is well worth it.

Alternative private lenders are able to help owners obtain gas station commercial loans, lines of credit, and cash advances. These financing options help service businesses keep their doors open and provide for employees and customers.

Private Mortgage Lending For Nursing Homes

If you’re looking for financing for a nursing home, consider a lender who has experience with a diverse investment portfolio of health care facilities, such as hospitals, assisted living facilities, and long-term care properties.

This type of private lender is well-positioned to provide commercial banking and investment advisory services to help borrowers find the best possible financing solutions. Ask for private lenders who have a history of providing commercial mortgage lending and other financial services to the long-term care industry.

Private Mortgage Lending For Religious Facilities

Religious facilities, such as churches, s are often the best candidates for private mortgage lending. They can borrow money and repay it over a long period of time. Church loans differ significantly from household loans and individual home mortgage loans.

Religious facilities don’t necessarily have a predictable or steady stream of income. Therefore, be prepared that private lenders will want to ask for a historical financial balance sheet and estimated cash flow projection to perform their due diligence in order to offer the best possible loan options.

Private Mortgage Lending For a Day Care Centre

There are several factors to consider before applying for a private mortgage for a daycare center. First, the business should be operating on a separate business bank account, which many lenders require to see past bank statements.

Lastly, getting a mortgage to purchase a property to operate a daycare center hinges on making sure the by-law allows it as one of the intended use categories. Without providing documents to validate the permit from the City, borrowers are hard-pressed to find any private lenders who would consider the loan application.

Quicker Funding

Private lenders are an ideal option since they are not tied to the same lending guidelines as traditional lenders which is limiting. Unlike bank loans, private lenders focus more on the value of the property and cash flow potential from the commercial properties to determine the terms of the loan. This means that they will not make any preconditions on the borrower’s credit score or debt to income ratio.

A big advantage of hard money lending is that you can beat traditional lenders’ interest rates and timeframes. While traditional banks are known for their long loan terms, hard money loans can close in just days or weeks. This is important in large development projects, as time is money. Getting a commercial mortgage loan approved faster helps you complete the project faster and avoid delays.

Origination Fee

Origination fee can also be referred to as “commitment fee”, or any other name. It usually refers to the underwriting or processing fee. This fee can cover a variety of expenses, from processing the loan to underwriting the loan. The amount of this fee depends on the lender and the type of mortgage loan. It is always stipulated in writing so there is no bad surprise to the borrowers on the closing day. If you are not sure how much you are paying for your origination fee, it is a sign that you are not working with an ethical private lender. Be aware and find other private lenders who are transparent with their origination fees.

At Canadian Private Mortgage, we disclose our commitment fee clearly in writing from the beginning of the process.

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What Our Clients Say

Andrea Chase - Hamilton, ON

Andrea Chase, Hamilton, ON

I had 2 yrs left on my consumer proposal, with the 2nd mortgage offer by Matrix Mortgage Global I was able to pay off the proposal and re-establish my credit

Steve Darcy - Surrey, BC

Steve Darcy - Surrey, BC

I own a historic mixed use commercial/residential building that I wanted to modernize. Matrix Mortgage Global provided me with a term loan to complete the renovations

Blake Taylor - Banff, AB

Blake Taylor - Banff, AB

I own a family bed and breakfast just outside Banff and ran into some tax arrears. Our bank turned us down for a commercial loan. Matrix Mortgage Global provided us with a 2nd mortgage which we used to pay off the tax arrears.

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