How Much Can You Borrow Against Your Commercial Property in Canada?

Begin with a current property value

The amount you paid for a building, the value in your accounts and a lender-accepted valuation can be different. Begin with an estimate and label its source and date. Do not present that estimate as an appraisal. If the building includes retail space, apartments or specialized production areas, describe the actual use instead of assuming it will be assessed like a standard office.

Loan-to-value, or LTV, expresses borrowing as a percentage of property value. It is one factor in commercial-property financing, alongside the lender’s assessment of the business and property. A valuation exercise alone therefore cannot tell you how much financing will be approved. ^[1]

United States comparison: OCC guidance treats collateral valuation and repayment analysis as relevant to owner-occupied commercial-property loans. U.S. supervisory guidance is not a Canadian borrowing limit or an approval promise. ^[2]

Calculate equity and borrowing headroom separately

Estimated equity equals property value minus debt secured against it. For a simple combined LTV calculation, divide total property-secured borrowing by property value. Where several facilities share security, ask the lender and lawyer which balances, undrawn commitments and registered amounts matter for their assessment. The number registered on title and the amount currently needed to discharge a loan may differ.

Illustrative borrowing headroom equals an assumed maximum property-supported debt amount minus the existing obligations being retained. This is a planning calculation. It does not account for every lender policy, legal priority or repayment constraint. Keep transaction expenses in a separate line until you know whether they will be paid in cash, deducted from proceeds or added to the loan balance.

Worked example: equity is not a credit limit

A fictional owner estimates a building at $1,100,000 with $140,000 outstanding on its only mortgage. Estimated equity is $960,000. To explore the arithmetic, assume a hypothetical combined LTV ceiling of 60%. This percentage is an invented scenario assumption, not a Canadian lending standard or a product offer. It gives a hypothetical debt ceiling of $660,000 and $520,000 of headroom before expenses.

The owner only needs $150,000 to replace selected business debts. If that amount is added while retaining the $140,000 mortgage, combined debt becomes $290,000 and LTV about 26.4%. If the accepted valuation were instead $900,000, the same borrowing would produce about 32.2% LTV. Neither result establishes affordability. A lender might still approve less than requested, or decline the transaction entirely.

Request the amount your business can use and repay

Build a debt schedule with each balance, interest basis, payment and intended payout date. Reconcile the requested proceeds with actual replacement debts and closing expenses. Asking for the largest amount suggested by a property calculation can create unnecessary interest and additional security exposure. Preserve a realistic operating reserve rather than using every dollar of cash to complete the transaction.

Take the calculation to your lender as a discussion sheet. Ask what valuation they require, how they treat existing security, what repayment evidence they need and whether consolidation is permitted. Then use the repayment-capacity guide in this series. The practical borrowing amount is constrained by the property assessment, acceptable structure and business cash flow together, rather than by the equity subtraction alone.

Your practical worksheet

Complete this using actual records. The fields are for printing and handwriting; they do not transmit your information.

Open the printable worksheet

Frequently asked questions

Is all my equity available to borrow?

No. Equity is a value estimate after secured debt. Lender limits, repayment capacity, expenses and existing agreements can restrict access.

Should I use residential HELOC limits?

Do not assume residential product limits apply to commercial property. Ask for the criteria for your specific property and facility.