Institutional Mortgage

If you and your company are looking to purchase a church or educational centre you will need a very specific type of financing. You and your company will need to consult your staff counsel or other legal authorities before applying for this type of financing known as an institutional mortgage.

What are institutional mortgages?

Sometimes referred to as “religion financing,” institutional mortgages are available for those looking for funding for houses of worship. These mortgages are also needed to purchase education centres, such as primary and secondary schools.

Institutional mortgages are considered niche lending by banks and lenders. However, like traditional mortgages, institutional mortgages are available in long-term, short-term, fixed-rate and variable rate financing.

Why are institutional mortgages considered niche lending?

Traditional mortgages are generally reserved for first-time home buyers. They are not given to corporations, companies, developers or religious institutions because in order to obtain funding for a larger buildings that are not owner-occupied (like a church or school), there is more land at stake and lawyers will need to be involved in the purchase. Institutional mortgages are considered niche lending because they refer to a very specific type of property that is owned by a larger entity instead of a first-time home buyer or landlord.

What documentation do I need to provide to get this type of mortgage?

When applying for an institutional mortgage you will need your company’s legal counsel to submit the below paperwork on your behalf. The same applies if you are looking for funds for a religious institution like a temple or church.

Your lawyers will tell you to put together the following package:

• Budgets, cash flow and financial statements – you may need to provide at least three years of documentation
• Copy of construction contract, details of contractors, payment arrangements, and other similar factors – This only applies if the property is not yet built
• List of assets and securities
• Facsimile of municipal approvals and the deed or purchase of sale agreement

Is it better to work with a broker to find an institutional mortgage?

Yes! Not all lenders will grant this type of mortgage. Industrial mortgages, because of their specific nature – i.e., they are usually not owner occupied or have any tenants – are considered risky. A mortgage broker can help you secure an industrial mortgage by proving to lenders that you and your company are not risky borrowers. Brokers have access to different lenders and can find one that offers the right industrial mortgage for your situation. In general, it is best to work with a broker when trying to acquire any mortgage whether it is residential, commercial or institutional. Apply now and speak to a broker to see if the building you wish to purchase will need an industrial mortgage.